A new report by bitcoin research firm Chainalysis shows between 17% to 23% of bitcoins have disappeared or are out of circulation for a variety of reasons.

The lost coins – estimated at between 2.78 million and 3.79 million bitcoins – represent more than $29.8 billion of “missing” digital currency at a trading value of $8,500 per bitcoin.  This value is calculated at the higher estimate of coins out of circulation.

Where have the coins gone?

The accompanying chart provides valuable insight into the nature of these missing coins.

Of these, 1.o4 million “original” bitcoins are estimated to be held and out of circulation by the original creator Satoshi. There’s no way to tell if these could come back into circulation in the future as the identity of Satoshi is unknown.

A second chart from Fortune magazine provides a clearer picture of what bitcoin the are truly “lost.”

The biggest number, or 50% of bitcoins out of circulation, are the so-called “Hodlers” – those holding bitcoin for longer-term investment.

Strategic investors hold another 2% of bitcoins and another 2% are out of circulation through trading and spending.

What if?

All this leads to an interesting question of what would happen to bitcoin values if a large number of these out of circulation bitcoins came back into the market.

Kim Grauer, Senior Economist at Chainalysis  tries to answer the key question in the Fortune interview:

“That is a very complex question. On the one hand, direct calculations about market cap do not take lost coins into consideration. Considering how highly speculative this field is, those market cap calculations may make it into economic models of the market that impact spending activity,” said Kim Grauer, Senior Economist at Chainalysis. “Yet the market has adapted to the actual demand and supply available – just look at exchange behavior. Furthermore, it is well-known monetary policy procedure to lower or increase fiat reserves to impact exchange rates. So the answer is yes and no.”

Scarcity is what maintains or drives up prices in any economy or marketplace.

From this research, it appears scarcity is a key factor in bitcoin values and so nervousness about hard forks and increased supply is warranted.

It’s early days for this new digital currency and anyone who says they can predict more this market more than one or two months ahead is selling smoke.

Maybe more important for investors is to stay alert to the question of bitcoin supply.

Read the Fortune article for more insight into the Chainalysis study.

Charts courtesy Fortune