Bitcoin whales are not responsible for volatility

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November 16, 2018 by
Bitcoin whales are not responsible for volatility

According to a new study by blockchain research firm Chainalysis show that the Bitcoin (BTC) whales have not any responsibility for the price volatility. During the study, it is examined the 32 largest BTC wallets that reportedly present near 1 million BTC or almost around $6.3 billion.

The BTC whales are individuals and entities that own great amount of the cryptocurrency and generally, they said to the experts who influence on the volatility of the market. However, the data of Chainalysis reveal that BTC whales are “a diverse group, and only about a third of them are the active traders. And while these trading whales certainly have the capabilities of executing transactions large enough to move the market, they have, on the net, traded against the herd, buying on a price decline.”

The firm has divided the 32 wallets into the different four groups in the course of the research and study. The different active category consists a total of nine wallets belongs to the traders and these traders would regularly conduct transactions with BTC on the exchange. This group of BTC owners have controls more than the 332000 coins, which is worth over $2 billion but only one0third of them are the active traders. In 2017, many of these traders reportedly enter into the market.

The miners and early adopters represent the second group in the list and also include 15 investors also hold over the total of 332,000 coins. The trading activity of this group is generally considered as extremely low and the reports also state that many of them made significant divestment from 2016-2017 at the time when BTC prices soared.

The remaining two categories were included in the three wallets of ‘criminals’ with almost over 125000 coins and $790 million in the asset value and the over 212000 coins worth about $1.3 billion are represented by the ‘lost’ wallets.

Since 2011, a deep study found that there have not been any transactions from the lost wallets at all. The major declines were found in 2017 and 2018 when the analysis of trading whales found that they do not intensify the volatility when they were net buyers of BTC. The study further says that “That net activity demonstrate that trading whales were not selling off Bitcoins in any mass amount, but rather were net receivers of Bitcoin from exchanges in late 2016 and 2017. This indicates that trading whales were, in aggregate, buying on declines and, consequently, were stabilizing, rather than destabilizing factors in the market…”

In December 2017, the BTC price surge to $19,000 and it will raise the concern of community about what happens if 1,000 people owning 40 percent of all existing BTC cash it out simultaneously. In addition to this, a coordinated strike by a host of whales by selling off the coins to cause a glut in the market that could sink the prices of certain traders for their advantage. The managing partner at Multicoin Capital, Kyle Samani said that he thinks there are few hundred guys that they probably can call each other.

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