Bitcoin Whales are individuals who own the large amount of bitcoins and they always remain in speculation, which is why they are said to influence the market volatility. A study done by blockchain firm called Chainalysis examines the role of bitcoin whales and their impact on the market.
The study inspects 32 largest BTC wallets that together hold 1 million of around 17 million BTC mined to date, which is equal to $6.3 billion. Chainalysis study says:
“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.”
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32 Largest Bitcoin Wallets
The firm classified these 32 wallets in four categories named: Traders, Miners/Early Adopters, Lost, Criminals.
The first category consists of 9 wallets owned by traders who regularly conduct BTC transactions on different exchanges. Collectively, they control more than 332,000 coins that worth over $2 billion. These are whales who actively trade, making-up largest category, but only one-third part of this group actively trade on BTC.
The second category represents minors or early adopters including 15 investors, that also hold more than 332,000 coins. According to research, their trading activity is extremely low ever since the bitcoin inception. Though report discloses that many of them did significant divestments between 2016 and 2017 when BTC prices were at peak.
The third category represents the five lost whales that make up the another largest part of crypto vessel, holding over 212,00 which worth around $1.3 billion. They are the lost wallets whose owners forgot private key and they are unable to access their bitcoins. The study shows that there have been no transactions conducted from lost wallets since 2011.
The fourth category consists of smallest part among others and it represents 3 wallets controlled by criminal whales, holding over 125,00 coins which worth approximately $800 million.
Role of Bitcoin Whales
This analysis of Chainalysis on trading-whales found that they don’t intensify market volatility or they are not responsible for it. However, they were actually the net buyers of BTC, not sellers, during major declines in 2017 and 2018. And, most of the traders entered in crypto world last year, who actively buy or sell BTC. The study further explains:
“That net activity demonstrates that trading whales were not selling off Bitcoin in any mass amount, but rather were net receivers of Bitcoin from exchanges in late 2016 and 2017. This indicates that trading whales were, in aggregate, buying on declines and, consequently, were a stabilizing, rather than destabilizing factor in the market…”
This lowers the suspicion of several Bitcoin watchers or speculators that these shady whales are manipulating the prices. Chainalysis Economist Kim Grauer explains that several Bitcoin wallets which appear on internet “Rich Lists” are not whales at all. Instead, they represent balances held by different exchanges and other commercial organizations during their day-to-day financial activities.
As The Oofy reported before Bitcoin Bull Run 2018.
Finally, the role of these whales in bitcoin market is being exaggerated. As, the top 32 whales control 6% of the crypto supply, and that figure further drops to 4.6%, when lost wallets are excluded. In essence, only the minority part of these wallets are active in the market; whenever they trade or act, they always act in such a way that supports the long-term valuation of bitcoin.