Blockchain research company Chainalysis has recently investigated the 32 largest wallets of BTC, or the so-called bitcoin whales. The biggest BTC owners hold a combined amount of 1 million BTC, equal to around $6.3 billion at press time.
Bitcoin whales have long been the scapegoats of the crypto sphere, shouldering the blame for the huge volatility of digital currencies. Back in August, Bloomberg even ignited rumours about a bitcoin whale, who supposedly single-handedly caused the BTC price to shed 15%, after selling 50,000 coins. The sudden price decrease had the crypto investors worried that a few big players dominate the BTC market and can influence the price at any moment.
However, the new data shows that such concerns are exaggerated. According to the report, “Bitcoin whales are a diverse group, and only about a third of them are active traders. And while these trading whales certainly have the capability of executing transactions large enough to move the market, they have, on net, traded against the herd, buying on price declines. They appear, in aggregate, to have stabilized the market during recent price declines, rather than exacerbating price movements. This makes sense since these trading whales are professionals with no vested interest in abruptly tanking the market.“
The researchers have divided the whales into four groups, the first of them being traders. The nine wallets possess more than 332,000 BTC (just over $2 billion), which is a third of total whale holdings. They engage in crypto trading on a daily basis and are relative newcomers in the crypto sphere, most of them entering the market in 2017.
The second group is miners or early adopters. It includes 15 wallets, also holding 332,000 coins. As you would expect, the trading activity of this segment is almost non-existent. Many of them have, in fact, cashed out a significant amount of their bitcoin holdings in 2016 and 2017, as the BTC price skyrocketed.
The last two groups are a bit shady: lost whales and criminals. Five wallets, holding over 212,000 coins (around $1.3 billion) have not seen any transactions since 2011, meaning that their owners have most likely lost their private keys. Unfortunately, this means they are no longer able to access their BTC holdings. Finally, there are three wallets with a total of 125,000 coins ($790 million). Two of are connected to Silk Road darknet market, while the other seems to be involved in money laundering.
The combined data on net gain or loss of BTC in these wallets suggests that, contrary to popular opinion, bitcoin whales do not cause volatility. In fact, they were increasing their BTC holdings in late 2016 and 2017, as the prices were soaring.
According to the researchers, “This indicates that trading whales were, in aggregate, buying on declines and, consequently, were a stabilizing, rather than destabilizing factor in the market. […] while Bitcoin whales may be big and somewhat mysterious, they have less of an impact on market prices than many people believe.“
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.