Data from the on-chain market experts Glassnode reveals the number of hodled or lost Bitcoin tokens has actually struck a seven-month high of 7,167,889.595 BTC. This represents 34% of the total supply.
This metric is obtained by taking a look at the motion of big and old stashes. But it has limitations in that it cannot distinguish between coins in storage and coins that cannot be accessed.
“Some coins are certainly lost as they were associated with a provably un-spendable output script, but the majority of lost coins can only be guessed by setting a threshold of inactivity after we consider them lost.”
The importance of this boils down to properly evaluating financier belief and modifications to saver’s habits. Thus, there are drawbacks in using it to gauge fundamental price drivers and if Bitcoin is overvalued, undervalued, or at fair value.
How many lost Bitcoin are there?
Lost Bitcoin describes the long-term loss of access to a wallet keeping the tokens. Given that the ledger is immutable, and there is no third party to call on for help in these circumstances, the BTC is lost forever.
Although healing services do exist, the jury is out on whether lost Bitcoin can be recuperated. There’s also the issue of scammers posing as recovery firms.
Nonetheless, millions of dollars of Bitcoin, and other cryptocurrencies, continue to get lost each year. Cane Island Digital Research estimates that users lose as much as 4% of the available supply every year.
Data experts, Chainalysis, dig much deeper with their June 2020 research study on ownership and trading. As of last year, their report reveals that 3.7 million tokens were lost, representing 20% of the available supply.
Their analysis is as follows:
- 11.4 million as financial investment
- 3.7 million as lost (defined as tokens not moved in five years or more)
- 3.5 million as moving in between exchanges for trading
- 2.4 million yet to be mined
Of course, specifying lost tokens as tokens stagnating in 5 years or more is filled with error. In that, it’s possible tokens within this category are still accessible but simply haven’t moved in five years.
That being so, it’s difficult to identify, with precision, just how much Bitcoin has actually been lost to user mistake or regrettable situations.
What is the effect of lost tokens?
Lost Bitcoin will reduce the token’s total supply. In theory, by making BTC even scarcer, this will serve as a chauffeur of rate gratitude.
As such, an increasing number of hodled or lost Bitcoin tokens is good for existing hodlers. But due to the fact that there are no splitting hodled coins and lost coins, the degree to which it’s excellent is a matter of dispute.
