Bitcoin FOMO.

FOMO.  It feels like the only way to describe it.  We are not unique in using this moniker to describe the bitcoin frenzy.  While the expression is new, the sentiment is about as old as humankind.  The Fear Of Missing Out.  It’s in our nature.  The irresistible allure of an easy reward pulling at you to make the leap.  We started reading stories in the news.  The pilates teacher who is now a millionaire.  Then we started hearing the stories directly.  The groundskeeper who quit his job to trade bitcoin full-time.  The meteoric price rise and fall and rise again that the media is all too happy to broadcast.  Bitcoin started as a statement against the traditional financial system.  It has now been seized by forces as old as time – fear and greed.  Only this time fear is greed.  The fear that others are making “a quick buck” easily turns into greed as you buy a bit yourself and see it rise.  Around and round the self-reinforcing circle goes, where it stops…….

While on the ride, we came across an interesting data source called BitInfoCharts.com (https://bitinfocharts.com/bitcoin/) which, despite lacking in aestheticism, relays some interesting information.  For example, as of 2pm CST on Friday December 8th, there have been a little over 400k bitcoin transactions in the last 24 hours with about 16% of the current market capitalization ($42.27 billion) trading hands.  Repeat: 16% of the overall market cap changing hands in the last 24 hours.  That equates to about a 7 blocks per hour pace or one almost every 9 minutes.  There is some skew in the trading activity.  The average transaction value was $105,437; however, the median transaction value was only $2,882.  That of course implies that most transactions are less than a single bitcoin.

It also gets interesting on looking the distribution of bitcoin wallet values which we can see because blockchain is open.  A full 55% of the active wallets hold less than $3 USD of bitcoin at current prices (<0.001 bitcoin).  Approximately 90% of active wallets hold less than $1,600 USD (<0.1 bitcoin)  Looking in aggregate, 97% of the active bitcoin wallets own less than 1% of all bitcoins in circulation.  Only 1,671 wallets (0.007% of the currently 24.5mm wallets), have 1,000 bitcoins or more and hold 57% of total bitcoins outstanding.  That is not a wide breadth of ownership.  No wonder the anticipated launch of futures trading by the CME and others (which has contributed to the fervor) will have to be cash settled in US dollars.