Holder concentration

How much of a digital asset's circulating supply sits with its largest holders.

Example

Ten addresses holding 38.0% of a 42,000,000 circulating supply is 15,960,000 units; 1% of supply is 420,000 units, against a book that absorbed 300.

Important

The figure matters because of its size relative to market depth, not on its own. It is not a prediction that a large holder will sell - it says the option belongs to somebody else and you would not see it coming.

Related terms

• Circulating supply — The units of a digital asset currently in holders' hands, as distinct from the total number that will eventually exist.
• Market depth — How many units are resting as orders near the current price - what a market can absorb before the price itself moves.
• Concentration risk — The risk that a large share of your wealth depends on a single outcome - one company, sector, property, currency, employer or counterparty.
• Slippage — The gap between the quoted price and the average price a trade actually achieves, caused by consuming successive levels of the order book.

Lessons that explain it

• Seven questions about one specific asset — What it does, who can issue more of it, who already holds it, how deep the book is, whether the rules can be changed, where you would keep it, and what would tell you that you were wrong. (14 min)

All 578 terms in the Investing glossary