As part of the transparency surrounding cryptocurrencies like Bitcoin (BTC), it is entirely possible to view and study the transaction history of pretty much any address. This makes large transactions very popular when it comes to analyzing the process of sending them, as well as trying to see how these transactions might influence the market, and the currency itself.
However, it is worth mentioning that Bitcoin also provides a certain level of anonymity and that data exported by blockchain browsers is not always 100% accurate. This makes identifying the owner of accounts responsible for large transactions very difficult, sometimes even impossible. However, by collecting data of over 1000 BTC transactions that were made from the beginning of 2017 until now, it was possible to create a relatively accurate analysis, and Huobi Research did just that.
What Did The Huobi Analysis Show?
The results of the analysis have pointed out some interesting facts. Most of the transactions were made in July and September of the last year, as well as in February and April of this year. These periods were short, close to periods of price low points, and have seen significant and violent price fluctuations.
Another interesting thing is that up to 87% of the transactions were made to new addresses, which are not expected to hold these coins for long, before sending them on. In fact, only around 5% of them still hold the received coins, while the rest of them have completely empty of Bitcoin. Up to 89% of them were shown to have gotten rid of the BTC tokens within 24 hours of receiving them, which likely makes them intermediates for BTC transport.
Not only that, but the addresses would break the large amounts, and send the smaller ones to numerous other addresses. It is also worth noting that 60 of 1000 recorded transactions are related to some of the richest BTC addresses to date. Finally, the last conclusion to be drawn from the data is that there are three formats for these transactions, and those are a linear schema, snowflake schema, and finally, the onion schema.
The data captured by Huobi Research includes things like addresses of senders and receivers, TXID, date and amount o the transactions, as well as the time of the address' creation, and more. The biggest transaction amount turned out to be 85947 BTC, while the smallest one was 16315 BTC.
As for the date of the transactions, the biggest ones were made in July and September of 2017, as mentioned previously, as well as in February and April of 2018. Three out of four of these time periods came right after the Bitcoin price hit a new low point.
Destinations of Transactions
The Huobi Research decided to make three separate categories for addresses involved in receiving the large transactions of Bitcoin. Those include new addresses (which were not activated before these transactions), old addresses (used for a while), and cold storage wallets on various exchanges (the most popular being Bitfinex, Bitstamp, Bittrex, and Binance).
The large majority of the recorded transactions (87%) were sent to the new addresses, which the researchers investigated further from two perspectives – the current balance of these addresses, and transactions' Bitcoin Days Destroyed.
Bitcoin Days Destroyed & Current Balance
BDD for any transaction can be calculated by multiplying the number of coins per transaction by the amount of time since the last use of those coins. So, the shorter the possession time of these coins, the lower the BDD. The analysis can be complex, and it depends on several factors, but the overall results have shown that the majority of the 87% of new addresses did not hold on to their new coins.
In fact, they sent them to new addresses within only a day, with barely 5% of them still holding on to some amount of those coins. Additionally, the majority of the 5% that kept the coins are in fact cold storages belonging to the exchanges. This means that the addresses that were quick to send the coins were simply intermediate transition addresses. Their role was to hold the coins for a short period, and then send them further, on other addresses.
The addresses that currently have zero balance were found to have mostly transferred all of their coins to a large number of other addresses, to around 50 or more of them.
Largest Transactions Went To The Richest Addresses
The largest 1000 transactions that were studied by the researchers have shown that around 60 of them were sent to 16 of the top 100 richest BTC addresses. Only 5 out of those 16 addresses included cold storages belonging to the exchanges, while 4 were old addresses, and 7 of them included new ones.
3 Types Of Large Transactions
As mentioned earlier in the report, the researchers divided the 1000 transactions into three commonly used formats – linear schema, also known as direct schema, snowflake schema, and onion schema.
The linear, or direct, schema is often used for transactions that go from cold storages to hot wallets. Additionally, it is also used for large BTC purchases by both, companies and individuals. It mostly follows the same linear structure, and it results in the receiving address keeping the coins.
When it comes to snowflake schema, it includes the address receiving a large transaction, and then dividing the funds into smaller portions, and forwarding them to other addresses in a short period of time. This is what the majority of these 1000 addresses did, and they only held the coins for 1 day. This method is called a snowflake schema due to its resemblance to a snowflake structure.
Finally, there is the onion schema, which means that the address that has received a large transaction will usually forward one large part of it to another, second layer address. The remaining part of the initial transaction will be divided into small parts and sent to multiple other addresses, similarly to the snowflake schema.
As for the large part that was sent to the first second-layer address, it will then be divided itself and sent to third-layer addresses in the same way as the original transaction. The process can go on and on, and the shape of the transactions (with multiple layers) resembles the layers of the onion, hence the name.
Obviously, this information is very useful for determining how the BTC distribution works in the modern crypto market. With this knowledge, the crypto analysts may be capable of drawing out various conclusions, including the future behavior of the crypto, its price, as well as tracking down the circulating supply of the currency.