According to recent on-chain reports, the number of addresses holding one Bitcoin or more hit a record high recently. Although the data carries some positive implications, it is important not to misread the same and get carried away as there are a lot of other factors that need to be considered here before predicting how the same could affect Bitcoin’s price.

New Bitcoin milestone

As per Glassnode, the number of addresses holding one Bitcoin or more rose to over 1 million on May 13, its highest-ever reading. Data from Glassnode also showed that the number of wallets holding Bitcoins particularly increased during several flash crashes last year.  Overall, 190,000 or so addresses were added from early February 2022 to May 2023, amid Bitcoin’s weakening price.

These numbers reflected a growing Bitcoin user base during events such as the TerraLuna crash in May and the FTX collapse in November, which caused Bitcoin’s price to plummet on the charts. The price drop may have created an opportunity for investors to accumulate Bitcoin at lower prices, leading to a spike in the number of wallet addresses.

Implications

So, what does this data mean for Bitcoin? The only conclusion that can be drawn right now is that investors have been keen to mop up a discounted Bitcoin when the moment arises.

This demonstrates a strong "buy-the-dip" mentality as people continue to jump on the Bitcoin bandwagon, despite a shaky market. However, it's important to note that one million addresses do not necessarily equate to one million users. A wallet can be owned by a single person holding 1 BTC, but it could also be managed by an institution or controlled by an individual with multiple wallet addresses.

Coinglass, another crypto analytical firm, also noted that major centralized exchanges like Coinbase and Binance manage 1.89 million Bitcoins (worth $50.7 billion) of the total 19.3 million currently in circulation.

According to BitInfoCharts, there are about 1.356 million Bitcoins worth $36.4 billion spread across nearly 46.5 million addresses that hold less than one Bitcoin. This portion represents only 7 percent of the total Bitcoin supply. The remaining 93 percent of the Bitcoin supply is held in one million addresses, each owning at least one full Bitcoin. This amounts to 18 million Bitcoins, worth $482 billion. In simple terms, this data shows that Bitcoin’s supply is less concentrated in the hands of whales when compared to some altcoins.

With that in mind, a rise in Bitcoin holding addresses could mean that more people are positive about the digital asset’s mid-long-term performance. Recently, Negentropic, co-founder of Glassnode, expressed confidence in Bitcoin's mid-term outlook, expecting it to surpass the $35,000 mark. He also stated that the best time to buy is when there is blood in the streets, meaning when prices are low.

Conclusion

While surpassing one million wallet addresses is a significant milestone, the same does not guarantee that each address represents a unique buyer. Furthermore, an increase in those buying Bitcoins at cheaper prices does not necessitate that everyone wants to HODL these coins in hopes of future price increases. These addresses could have simply bought Bitcoins to offload them during the next uptrend to make a quick profit.

Furthermore, the next major bull run is dependent on several factors besides BTC accumulation. Factors such as global inflation, interest rates, the strength of the US dollar, etc., could all affect the demand for Bitcoin. Both retail investors and institutions need to join the fray to sustain Bitcoin’s price at higher levels.  As of May 16, Bitcoin was trading at $27,000, having struggled to break above the $30,000 barrier over the past couple of months. Its price was down by 1.2 percent over the last 24 hours and down by 2.7 percent over the last seven days.