Does Bitcoin Whales really control the Market?
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There has been much of a controversy on this point. When taking a look at the distribution of Bitcoin funds in wallets, it would seem as if a large percentage of the total number of bitcoins is kept by few hands.
Bloomberg once tried to infer a situation of large market concentrations from the distribution of bitcoins in wallets. On a notably tendentious article titled “The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market”, the author engages in the following FUD-boosting argumentation line “While they (ordinary investors) can track addresses with large holdings online and start heated discussions of market moves on Reddit forums, they’re ultimately in the dark on the whales’ plans and motives”.
The writer keeps on arguing in the same direction: “the top 100 bitcoin addresses control 17.3% of all the issued currency […] with ether, a rival to Bitcoin, the top 100 addresses control 40% of the supply”.
The premise of this article is fake, as it constitutes what in science is normally called an ecological fallacy: making assumptions on individuals based on inferences about the group they belong to. Andreas Antonopoulos
Put simply, there is no way Bloomberg or anybody else can determine market concentration just by looking at Bitcoin wallets, as this data does not correspond or even approximates remotely to the real number of Bitcoin users.
A single wallet can store funds belonging to millions of investors, and a single investor can own a million wallets.
Then, how much of an influence do Bitcoin whales have over the market?
The most up-to-date and serious research about the true nature and impact of Bitcoin whales was published last October by crypto research firm chainalysis.
Read more: Research: Whales are not destabilizing, but stabilizing the Bitcoin market
The study analyzed the 32 largest Bitcoin wallets not belonging to exchanges. First, they conclude they hold about 1 million BTC, or about 6% of the current circulating supply of 17.5 million BTC. This is perhaps the soundest estimation in so far of how much BTC is on the hands of Bitcoin whales.
Although 6% might seem as a lot, the percentage is not as high when put into the fairly similar context of stock ownership. About 6% of Apple is owned by investment firm Blackrock alone. And Bill Gates owned more than 1% of all Microsoft shares until selling most of them over the past years.
Looking at firms on an earlier stage of their public trading history, and thus more relatable to the 10-year-old Bitcoin, their shareholder concentration is even higher: Spotify CEO Daniel Ek still owns 25% of the company’ stock.
When it came to probing the real power of whales to manipulate the market by acting together, there were some surprising conclusions. As shown in the above chart, Bitcoin whales actually tend to stabilize markets, contrary to popular opinion.
During large sell-off periods, they were net receivers of Bitcoin from exchanges. A limitation of this study that needs to be taken into account is that it did not include on-exchange transactions.
Join- https://t.me/btctradingclub
Join- https://t.me/bestbitmexsignal
There has been much of a controversy on this point. When taking a look at the distribution of Bitcoin funds in wallets, it would seem as if a large percentage of the total number of bitcoins is kept by few hands.
Bloomberg once tried to infer a situation of large market concentrations from the distribution of bitcoins in wallets. On a notably tendentious article titled “The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market”, the author engages in the following FUD-boosting argumentation line “While they (ordinary investors) can track addresses with large holdings online and start heated discussions of market moves on Reddit forums, they’re ultimately in the dark on the whales’ plans and motives”.
The writer keeps on arguing in the same direction: “the top 100 bitcoin addresses control 17.3% of all the issued currency […] with ether, a rival to Bitcoin, the top 100 addresses control 40% of the supply”.
The premise of this article is fake, as it constitutes what in science is normally called an ecological fallacy: making assumptions on individuals based on inferences about the group they belong to. Andreas Antonopoulos
Put simply, there is no way Bloomberg or anybody else can determine market concentration just by looking at Bitcoin wallets, as this data does not correspond or even approximates remotely to the real number of Bitcoin users.
A single wallet can store funds belonging to millions of investors, and a single investor can own a million wallets.
Then, how much of an influence do Bitcoin whales have over the market?
The most up-to-date and serious research about the true nature and impact of Bitcoin whales was published last October by crypto research firm chainalysis.
Read more: Research: Whales are not destabilizing, but stabilizing the Bitcoin market
The study analyzed the 32 largest Bitcoin wallets not belonging to exchanges. First, they conclude they hold about 1 million BTC, or about 6% of the current circulating supply of 17.5 million BTC. This is perhaps the soundest estimation in so far of how much BTC is on the hands of Bitcoin whales.
Although 6% might seem as a lot, the percentage is not as high when put into the fairly similar context of stock ownership. About 6% of Apple is owned by investment firm Blackrock alone. And Bill Gates owned more than 1% of all Microsoft shares until selling most of them over the past years.
Looking at firms on an earlier stage of their public trading history, and thus more relatable to the 10-year-old Bitcoin, their shareholder concentration is even higher: Spotify CEO Daniel Ek still owns 25% of the company’ stock.
When it came to probing the real power of whales to manipulate the market by acting together, there were some surprising conclusions. As shown in the above chart, Bitcoin whales actually tend to stabilize markets, contrary to popular opinion.
During large sell-off periods, they were net receivers of Bitcoin from exchanges. A limitation of this study that needs to be taken into account is that it did not include on-exchange transactions.
