Over 31% of Bitcoin’s Circulating Supply is Held by Institutions, Increasing Market Influence

Gemini and Glassnode Report on Bitcoin Ownership

Cryptocurrency exchange Gemini and on-chain analysis firm Glassnode jointly released a report on Wednesday, indicating that currently, 30.9% of the circulating supply of Bitcoin is held by centralized entities (including governments, ETFs, publicly traded companies, and centralized exchanges), marking a structural transformation in the market toward institutional maturity.

Researchers noted that since early 2015, centralized exchanges have gradually become the primary custodians of Bitcoin, initially holding fewer than 600,000 Bitcoins on behalf of users. Today, the amount of Bitcoin held by major institutions and custodial entities has surged to 6.145 million Bitcoins, valued at approximately $66.8 billion at current prices, representing a 924% increase in the supply held by centralized entities over the past decade.

The report analyzed 216 major holding entities across six primary categories (including exchanges, ETFs/funds, publicly traded companies, private companies, DeFi/smart contracts, and governments), which collectively hold nearly one-third of the circulating Bitcoin supply, with exchanges holding the largest share.

Changes in Bitcoin Holdings by Entity Type

Source: Gemini

The report highlights that in almost all categories of institutions (except private companies), the top three entities control between 65% to 90% of the Bitcoin holdings within that category, “emphasizing the dominance of early adopters in the Bitcoin inventory space.” This concentration phenomenon is particularly evident in the DeFi, publicly traded companies, and ETF/fund categories.

Significant Shift of Bitcoin Supply to Fund Products

Researchers indicated that centralized exchanges, ETFs/funds, and to some extent, DeFi protocols provide Bitcoin custody services for clients seeking exposure to the spot market. Over the past two years, the Bitcoin inventory at centralized exchanges has declined, which is often misinterpreted as an impending supply shortage; however, most of this Bitcoin has actually been transferred to ETFs and funds, particularly the spot ETFs in the United States.

Data shows that since June 2021, the Bitcoin inventory in these spot trading markets has remained relatively stable, fluctuating between 3.9 million and 4.2 million Bitcoins, indicating that the decline in exchange inventory does not represent a reduction in overall supply but rather a “structural reorganization of custody structures.” Despite the rising proportion of ETFs, reflecting greater adoption by traditional finance, the overall liquidity available to spot buyers has remained largely unchanged.

Bitcoin Holdings Changes in DeFi/Smart Contracts, ETFs/Funds, and Exchanges

Source: Gemini

Institutional Adoption Stabilizes Prices

Researchers noted that as Bitcoin adoption expands, particularly among sovereign entities and regulated financial institutions, the annualized realized volatility across all time frames (from one week to one year) has been consistently declining since 2018. The launch of the U.S. Bitcoin spot ETF has further reinforced this trend, bringing stable inflows of capital into the market and improving liquidity depth.

The report stated:

Source: Gemini

Researchers also found that institutional adoption is gradually shifting Bitcoin market activity from on-chain settlement to off-chain infrastructure, with centralized exchanges, U.S. spot ETFs, and regulated derivative trading platforms accounting for the majority of trading volume. Researchers stated:

Additionally, the report examined the impact of Bitcoin transfers by sovereign nations on prices, noting that these wallet activities occur infrequently and “have little correlation with Bitcoin’s price cycles.” However, once these Bitcoins are moved or sold, they could still have a significant impact on the market. The report mentioned Bitcoin holdings of governments in countries such as the United States, China, Germany, and the United Kingdom, most of which were acquired through law enforcement actions rather than market transactions.

Source: Gemini, Cointelegraph