Two research firms, Diar and Chainalysis have just released their data after carrying out a detailed analysis of the performance of Bitcoin Core, the main fork of bitcoin (BTC) right now. The research has brought up some startling facts which show that 36 percent of BTC in currently circulation is reportedly lost while 22 percent of BTC is held by speculators.
Chainalysis focused on how the Bitcoin Core money supply is doing. This is an ongoing study and the firm has worked on it for a year now. The study showcases data that it believes is responsible for the massive drop in bitcoin prices during 2018. According to the firm, speculators sold off around $24 billion worth of bitcoin to new users in the period between December 2017 to April 2018.
December 2017 was when half of the sales were done. Many experts point to this massive injection of liquidity as the main reason for the dramatic fall in prices for bitcoin. Another surprising data point is that many speculators and investors held their position over the summer. Chainalysis came up with these results after analyzing their data of on-chain activity combined with their analysis of the money supply.
In a statement, Chainalysis said
For emerging financial systems, such as the crypto-economy, building an understanding of the underlying economic signals is a key factor in empowering participants to make more informed decisions. People are simply less likely to stay in, and are less well served by, a market that appears random and based on hype. If we can identify and monitor clear signals and those signals are logical more people will feel comfortable investing
Increased Monitoring By Authorities
Diar is the other data firm that released their findings recently. According to their researchers, there has been increased spending at firms that monitor blockchain transactions. This is fueled by the efforts of those in authority. As the blockchain economy matures, regulators and tax collectors are doing their best to enforce various laws in the market.
US authorities are concerned about these numbers and the Internal Revenue Service (IRS) is keeping a close watch on bitcoin. Their total budget for investigations is $28.8 million and they have already used $5.7 million to ensure their blockchain analysis abilities are top-notch. Chainalysis has $5.3 million worth of contracts with government agencies and the IRS is the company’s biggest customer. As the market matures, regulators will want to have a closer look at the cryptocurrency market and things might get more difficult for bitcoin traders.
