‘Bitcoin whales’ control third of market with $37.5bn holdings

Source: FT, Jun 2018

A mysterious cluster of 1,600 investors known colloquially as “bitcoin whales” collectively hold $37.5bn of the cryptocurrency, or close to a third of the available total, revealing the extent to which wealth is concentrated in the nascent market.

Data from Chainalysis, a blockchain research company, seen by the Financial Times showed that in April this year, there were some 1,600 bitcoin “wallets” — the digital stores held by individual users — containing at least 1,000 bitcoin each.

Just under 100 wallets contained between 10,000 and 100,000 bitcoin, roughly worth between $75m and $750m at today’s prices.

That the bitcoin market is so tightly held stands at odds with bitcoin’s mission to democratise finance by setting up an alternative monetary systemfree of central bank control and open to all. It also brings risks for smaller speculators.

“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),” said Philip Gradwell, Chainalysis’ chief economist.

Last November, the amount of bitcoin owned by those who held the asset for more than a year was roughly three times that held by short-term investors who traded more recently.

However, by April 2018, the data showed the amount held by long-term investors, at about 6m bitcoin, was much closer to matching the amount held by short-term speculators, with 5.1m bitcoin.

Chainalysis estimated that many longer-term holders sold at least $30bn worth of bitcoin to new speculators over the December to April period, with half of this movement taking place in December alone.

Experts also warn there are opportunities particularly for larger players to engage in market manipulation owing to the lack of regulation and the existence of informal over-the-counter markets.

“A number of these larger holders do communicate with each other, they know [each other], they take stock of market activity,” said Dr Garrick Hileman, head of research at Blockchain and co-founder of Mosaic.io, a platform for market intelligence on crypto.

Hannah Murphy FT FT2 hours ago

@Dr Phil Hi Dr Phil, this data does not include the wallets that are run by crypto exchanges. Chainalysis estimates groups such as exchanges or merchant services held about 2.2m bitcoin in April. 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.