Eddie Tofpik Head of Foreign Exchange at ADM Investor Services International Limited in London
Eddie Tofpik Head of Foreign Exchange at ADM Investor Services International Limited in London

Who’s holding all the Bitcoin...and why all the FUDing?

My previous e-FOREX article found interesting research about who bought Bitcoin and why. You’ve heard about the recent ‘doomsdayers’ and elderly middle America starting to hodl Bitcoin assets, so first lets deal with terminology! ‘Hodl’ or ‘hodling’ is misspelling of hold or holding on a message board back in 2013.

Who’s holding all the Bitcoin...and why all the FUDing?

My previous e-FOREX article found interesting research about who bought Bitcoin and why. You’ve heard about the recent ‘doomsdayers’ and elderly middle America starting to hodl Bitcoin assets, so first lets deal with terminology! ‘Hodl’ or ‘hodling’ is misspelling of hold or holding on a message board back in 2013. It was left and became Bitcoin slang for long term keepers of cryptocurrencies. FUD is older, an acronym for Fear Uncertainty and Doubt. In the crypto-community it’s the response to ALL cryptocurrency criticism and recently used to promote rotation amongst coins.  

So who are these original hodlers? Most are lost forever – like old Dollar bills. Digital forensics company Chainalysis recent study estimated (...a lot’s estimated...) by last November some 16.4 million Bitcoins were mined (604,000 in 2017). 3.6 million were with investors, 6.1 million in circulation and 5.1 million with early miners and out of circulation Hodlers. There’s estimated 2% losses in all except Hodlers. There was an estimated 50% lost as passwords forgotten, laptops discarded, stolen, lost, etc... 2.6 million of Hodlers hodlings...huge! Then there’s the original ‘Satoshi Coins’. Inventor – Satoshi Nakamoto  (whomsoever he, she or they are) had/has in listed wallets. Of these 1 million odd Bitcoins an estimated 0 – 100% are available...no-one knows! Coming to market it’d be devastating, as if all lost Hodlers remembered their Bitcoins and sold. 

There’s been a lot of media and finance industry FUDing – schadenfreude at Bitcoin’s drop. It’s disturbing to see their enjoyment. It’s been a well telegraphed (yours truly included) Bearish instant in Bitcoin history – the start of Bitcoin futures. Futures brought maturity and some respectability. I’ve even argued unbundling of services under MiFID II may help Bitcoin (you see the costs, however high...but make sense for some...). Despite regulatory pressure from China, South Korea and Japan, others will step in. Recently, India’s started to show whilst countries from Afghanistan to Zimbabwe like Bitcoin because the alternative’s...nothing! Interestingly, some suggest low cost energy in Venezuela gives it the lowest mining cost per Coin. There’s also the illiquid fragmented market, Latin American Bitcoin’s often lower than European whilst African Bitcoin attracts a premium of 30 - 40% over Europe. Some analysis (ironically) at JPMorgan indicated, Bitcoin’s potential to become an Emerging Market. 

I’ll finish on this thought… ‘’...common people may be the ‘gasoline’ behind the rising value of Bitcoin as trust was lost in financial institutions around 2008...’’.