Are Bitcoin Whales The Ones Shaping The Market?
Oct 11, 2018
A popular school of thought among many people in the crypto space is that a small number of Bitcoin owners with a big enough load of bitcoin to move the market are behind the unstable markets and the price manipulation. Now, a new study has been published and calls these holders of Bitcoin, whales and that they are actually doing a positive thing for the market rather than a negative thing.
A section of the study says:
“They [Bitcoin Whales] 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. When they require liquidity, traders are likely to use OTC trading platforms equipped to manage large transactions with minimal market disruption.”
The study was administered by Chainalysis and used information from over 30 wallets which had that the highest amount of Bitcoin in them which sums up to a billion Bitcoin, consisting of miners, criminals, lost wallets and traders.
Miners and those who adopted early were put into a separate group which controls over 330,000 Bitcoin. This was a total of 15 investors which had a very low trading activity despite the belief that they did massive investments during the price surge last year in 2017.
There were also criminals which were found to control over 125,000 Bitcoin whereas there was more than 210,000 Bitcoin found for lost wallets category which had no transactions history since 2011.
There was a total of nine traders which controlled over 330,000 Bitcoin. These traders were believed to join the market during the changes in the market last year and were always trading on exchanges despite controlling an excess of $2 billion of Bitcoin. This was found that only a third of them actually actively trade.
However, the researchers behind the Chainalysis report did admit that the whales hold a significant Bitcoin to destabilise the market if they decide to sell, the study shows that they actually help to keep the market stable and ‘in shape’.
“As our taxonomy makes clear, only the traders, representing about one-third of whale assets, are actively buying and selling bitcoin. Early adopters/miners and criminals have been in a holding pattern in recent years and lost bitcoin whales have, by definition, been inactive since 2011 (and, we assume, will remain so indefinitely).”
But in general, the study suggests that Bitcoin whales aren’t responsible for the manipulation in the market due to the small percentage of those in the trader category actively trading.
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