Less than 0.25% of the adult population currently has an investment in bitcoin. That’s less than one in 400 persons. The actual estimate is close to one adult in 800. On the other hand, a far higher percentage have heard of bitcoin. Publicity in the mainstream media is growing.

Over the last 12 months there were 1’700’000 new first time users of bitcoin, bringing the total number of bitcoin users to 5.6 million at the end of Sept 2017. That was a 43% increase in the number of first-time bitcoin owners.

Those new users together with the 3’900’000 previous bitcoin owners bought an estimated 4.6 million bitcoin. That’s an average of 0.82 bitcoins per user.

The supply of newly mined bitcoin over the last 12 months was nearly 700’000 coins. The remaining 3.9 million of supply came from existing holders, especially whales, who reduced their holdings as the price rose.

On average it works out that 50% of bitcoin owners sold 50% of their holding to meet the demand from new buyers. If that figure seems high, it is, - many of the sellers were whales, who distorted the average. Net-net, whales, (holding more than $1 million in coins) reduced their holdings - expressed in number of coins, but not value. Net-net smaller holders increased the number of coins they hold overall. In other words, sales by whales trickled down to purchases by smaller investors below $1million.

If we strip out the whales, it seems likely that only around 25% of typical bitcoin holders were actual sellers and they may have sold around 33% of their holdings. That’s just my educated guess based onwallet movements over the last 12 months.

The whales, represent close to 50% of all bitcoin in circulation. Most holders, (85% of total holders) own less than $10’000 of bitcoin. The influence of the whales is reducing as the bitcoin wealth is being redistributed amongst smaller holders.

There were 15’900’000 bitcoins one year ago and now there are 16’600’000 coins.

What can we expect over the next 12 months?

Let’s see what would happen if last year’s numbers were to repeat themselves:
43% growth in bitcoin users = 2.4 million new users.
Total bitcoin users by sept 2018: 8 million
Average Number of bitcoins to be purchased: 0.82 coins
Total number of coins required: 6.6 million
Number of coins to be mined 656’000
Supply from existing holders who sell (50% of holders sell 50% of their coins) = 4’150’000.

Thus we have total supply of 4.8 million and total demand of 6.6 million.

The above numbers are based on last year’s investor behaviour - during a time when the bitcoin price rose 6.6 X in one year. Unless the bitcoin price repeats last year’s behaviour, sellers would be fewer than the above estimate. It is also plausible that new first time bitcoin users may grow faster than 43%. Bitcoin is getting far more publicity now than a year ago.

To bring supply and demand into balance it looks like it will have to do more than that this year. In one calculation I came up with a one-year price estimate of $98’630.94. I might be wrong about the 94 cents.

Please do not take anything I say as an estimate or forecast. Everything is just an educated guess, and the mathematics used may be flawed.

Why you should avoid buying bitcoin

What could go wrong? Lots of things. I list them in my posts linked below. The price of bitcoin could fall to zero. Even if bitcoin looks like a good bet, compare it to the hot favourite at a horse race. It could fall at the first post. If you bet on bitcoin and lose it all, will your spouse divorce you and your children hate you? Will your friends say, “I told you so”, and your enemies laugh at you? Will your boss fire you? (Employees of JPM take note).

The listed posts contain references to the raw research which led to the above estimates.
https://steemit.com/bitcoin/@swissclive/bitcoin-price-could-be-usd98-630-94-by-end-of-september-2018
https://steemit.com/net-wealth/@swissclive/net-wealth-dollar-wealth-bands-compared-to-bitcoin-wealth-bands-and-projection-of-cashflow-into-bitcoin-over-the-next-12-months