A prevailing theory as to why the cryptocurrency market has experienced a significant sell-off in 2018 is that “whales,” investors who hold significant amounts of Bitcoin (BTC), are working to add volatility by dumping their holdings onto the market via OTC markets.
According to this analysis, which breaks-down Bitcoin’s 32 largest wallets, the greater majority of whales are, in fact, not active traders. Instead, only roughly one-third of the largest Bitcoin accounts, holding $2 billion in coins, have regularly engaged with exchanges to buy and sell BTC.
Of the remainder of the accounts, 33% are classified as miners, early adopters and holders, which includes 15 investors that hold 332,000 coins, worth more than $2 billion. Chaninalysis notes that these investors rarely make trades, and most of their action was seen in 2016-2017, where they made significant divestments.
The remaining third include “criminal whales” and accounts that are associated with lost coins. Notably, two of the criminal accounts are associated with the Silk Road darknet market, which became the largest Bitcoin-driven illegal operation before being shut down originally in 2013.
As for the lost coins, these accounts are classified as making no transactions since 2011 and account for a whopping $1.3 billion in BTC. These coins, unless recovered, will likely be counted as a permanent deduction from the total supply of Bitcoin.
All things considered, the report shows that Bitcoin whales are likely not the hidden hand of volatility, but instead are relatively stagnant in their activity, stabilizing the market.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.