A new class of wealthy people has emerged as a result of the recent boom in Bitcoin (BTC) and other cryptocurrencies; many of these people became rich by entering the market early and using “HODLing” methods. But during the past year, the market has undergone a severe collapse, with the price of Bitcoin plummeting precipitously, severely harming the fortune of many holders.
In particular, as of January 2, 2023, there were 28,007 Bitcoin millionaire addresses, down roughly 71.73% or 71,085 addresses from January 2, 2022, according to data gathered. There were 99,092 millionaire addresses at the beginning of last year.
The number of addresses holding $1 million worth of Bitcoin was 90,902 in January 2022, according to records; this number fell by 73.33% year over year (YoY) to 24,208 in January 2023. Likewise, addresses holding at least $10 million in Bitcoin peaked in January 2022 at 8,190 before falling by 62.5% to 3,799 in January 2023. Notably, at 13.47 million in January 2023, the majority of Bitcoin addresses have between $100 and $999 worth of BTC.
Bitcoin millionaires are destroyed by a bear market
Many investors have experienced a considerable decline in the value of their assets as Bitcoin’s price keeps dropping. Thus, the decrease in millionaire addresses serves as a stark reminder of how far the cryptocurrency market has dropped since the 2021 bull run. The downturn is correlated with the asset’s volatility, which has been a feature of 2022 due to a number of issues including macroeconomic concerns, regulatory scrutiny, volatile markets, and fraud-related events like the crash of the FTX crypto exchange and the Terra (LUNA) ecosystem crash.
Overall, the situation has made many investors and speculators fearful of the market, which has caused the demand for cryptocurrencies to decline. The market has been affected in a cascading manner as a result, with little evidence of a recovery in the value of cryptocurrencies.
It’s important to note that there are fewer millionaires with Bitcoin now than there were before the price collapse. Due to Bitcoin’s recent wild decline, it is more likely that investors may liquidate their holdings to stop future losses. The American business intelligence firm MicroStrategy sold over 700 Bitcoin as an example of how institutions have joined on the liquidation bandwagon. The company had determined never to sell the asset, therefore the development was viewed as unexpected. For the sale, the corporation gave a tax justification, though.
The crypto playing field differences
Curiously, the rise of Bitcoin billionaires has raised concerns about the effectiveness of cryptocurrencies in leveling financial playing. Although it can be difficult to pinpoint the precise millionaire owners of digital assets due to their anonymity, several affluent individuals are known to own significant ownership stakes in the industry. Notably, despite a decline in wealth, billionaires are still far better off financially than traders with low net worth. Some smallholders in this situation staked their entire lives’ savings on the industry.
In this area, due to the bear market, many companies have been compelled to scale back operations by implementing measures like hiring freezes and employee layoffs. As a result, bosses have escaped harm while traders and staff lose their money and lose their jobs.
Furthermore, a movement for establishing rules has been influenced in part by the gap between the bulk of ordinary holders and the minority millionaire investors. Overall, there is a lot of speculation that the implementation of laws will have an effect on the price of Bitcoin and, as a result, the holders’ net worth.
Bitcoin’s next move
Commentators concur that the price of risk assets like Bitcoin could continue to decline for a longer period of time due to the growing concern surrounding the stability of global markets. For those who are still in the market, there is still hope despite the present crypto cold.
Some analysts and investors are bullish about the future of cryptocurrencies; they predict that Bitcoin’s value will increase as a result of things like an easing of Federal Reserve monetary policy, declining inflation, and perhaps a rally from the impending halving event in 2024.
Additionally, the market’s growing institutionalization and the emergence of new industries like decentralized finance (DeFi) projects may spur future expansion. It’s unclear whether the market’s current crypto winter will quickly end or last for some time.
The bulk of crypto enthusiasts feels that the bear market is a common occurrence and that the current effects are only temporary. However, for those who have been holding onto Bitcoin for a while, the declining prices have provided a chance to store the commodity in the hopes of profiting from a potential rally.
