Bitcoin Susceptible to Wild Swings as Whales Get Even Bigger
- Only 3.5% of all addresses are actively trading in a week
- There has been increased consolidation among large Bitcoin owners
- Bitcoin whales are growing bigger.
Investors with 1,000 to 1 million Bitcoin now hold 42.1% of all BTC supply, up from 37.9% during the peak of the crypto bubble in 2017, as per the data from researcher Coin Metrics.
During and after the 2017 boom, small retail holders that invested a few hundred or a thousand dollars cashed out of the market. But the latest data suggests big holders are on the increase. This rising ownership concentration means the sway BTC whales have on the price are likely to be increasing as well.
Currently, as we have seen, the majority of the addresses are dormant. Actually, researcher Flipside Crypto revealed that only about 3.5% of all addresses are actively trading on any given week.
This coincides with the extremely weak volume registered on the top 10 cryptocurrency exchanges with real volume. Last week, at one point less than $150 million exchanged hands, currently it’s at about $175 million, as per Messari.
Few Large Players can Easily Push the Price Down
This, however, makes it easier for a few large players to have a big impact on the price.
“The problem with a few large players holding crypto is that when they sell they can easily push the price down, which makes the market susceptible to rapid swings,” John Griffin, a finance professor at the University of Texas at Austin, who published research on market manipulation in cryptos told Bloomberg.
Eric Stone, head of data science at Flipside also says, “A few really big wallets own a lot of the currency. Exchange marketplaces are unregulated and not audited. So there’s just a lot of potential for someone who wants to manipulate the market to do so.”
Top addresses now control 15% of BTC supply
As of Sept., over 27 million wallets held a balance of less than 10 BTC. As we reported, “There have never been this many addresses holding btc in the history of Bitcoin.”
When it comes to whales, the top 1,000 addresses control 34.8% of all available BTC which is slightly up from 34.4% at the end of 2017. The top 10,000 to 100,000 addresses that now account for 15% of BTC supply are also up from 10% just 18 months back.
These addresses are likely to be held by high net worth individuals, according to Aaron Brown, an investor and a writer for Bloomberg Opinion who says they might not stick around if the digital asset doesn’t perform.
But these addresses could be in fact exchanges and custodians. According to Flipside, exchanges hold about 5% of all available coin supply while Coin Metrics believes it to be 20%.
Bitcoin meanwhile hasn’t only been the best performing asset of 2019, with 87% gains YTD but also of the decade.