According to blockchain research company Chainalysis, one third of circulating Bitcoin wealth, worth $37.5 billion is held by 1,600 hard-core investors, or “Bitcoin Whales.” Who are this mysterious bunch, and what are their intentions?
According to recently revealed data collected by Chainalysis, a cutting-edge US-based blockchain research company, $37.5bn worth of BTC – close to a third of the available total – is currently being held in 1,600 Bitcoin wallets – each containing at least 1,000 Bitcoin. The unnamed owners of these wallets – labeled Bitcoin Whales – would appear to be aware of each other, and have made a concerted effort to apparently capture what amounts to a third of the Bitcoin market – around five million BTCs. These missing Bitcoin were assumed lost for years.
Around 100 of those wallets contain between 10,000 and 100,000 Bitcoin, which at today’s valuation is worth between $75m and $750 million. The fact that such a substantial section of the Bitcoin market is being so tightly controlled by a small cluster of “Whales” is seemingly at odds with Satoshi Nakamoto’s original vision for Bitcoin. In 2008, Satoshi set out to democratize finance by setting up an alternative monetary system – Bitcoin – free from the control of governments and central banks, and open to all.
As Philip Gradwell, Chainalysis’ chief economist put it:
“This concentration of wealth means that bitcoin is at risk of volatility, as the moves of a small number of people will have a large effect (on the price).”
By some distance, Bitcoin remains the most popular and valuable cryptocurrency. However its current value (around $7,600 per BTC) is less than half of its peak value of just under $20,000, achieved briefly last November. Crypto enjoyed an incredible surge in value last year as retail investors rushed to try to cash in on its rise.
Crypto Hurt By Google, Facebook and Twitter Ad Ban
Bitcoin’s price alone increased by 1,000% in 2017, peaking at $19,900. The crypto market’s subsequent 2018 fall from grace is in part due to a fear of ensuing regulations scaring the market, but more of the blame must be levelled at Google, Facebook and Twitter, who proceeded to publicly destroy cryptocurrency’s reputation by banning its advertising from their platforms.
Chainalysis also revealed that some early yet substantial Bitcoin investors cashed out their holdings when large numbers of speculators turned up.
According to Chainalysis’ data, last November Bitcoin had three times more long-term (more than a year) investors than short term. However by April 2018, the same data revealed that the amount of long-term investors – with holdings of 6 million Bitcoin, in comparison to short term owners (with 5.1m Bitcoin) had shortened considerably.
Chainalysis believe that many longer-term Bitcoin owners chose to sell off at least $30bn worth of BTC, much of it to new speculators. These transactions occurred from December 2017 to April 2018. As Philip Gradwell says:
“This was an exceptional transfer of wealth and conditions for it to occur again are unlikely to form again soon.”