Bitcoin whales have been identified and characterized, study shows they are helping to stabilize the market
Image source: pixabay - 12019
An in-depth analysis performed by Chainlysis, a blockchain security analytics team, showed the results for the 32 largest Bitcoin wallets. The summary of their analysis revealed how these Bitcoin whales have stabilized the market rather than causing further volatility.
The 32 wallets are categorized into four groups: Traders, Early Adopters, Lost and Criminals.
Traders
The nine wallets that are actively trading in the market, currently holds about 332,000 Bitcoins in total which is equivalent to worth about $2 billion. They are also wallets that are newly created in 2017.
Early Adopters
The 15 wallets in this category are a dormant group of investors holding about 332,000 Bitcoins in total. The wallets were created before 2017, and it is assumed that the coins were bought at a low value before the peak in Dec 2017. The low trading activity in this group also represents a group of hodlers that could be helping to stabilize market prices.
Criminals
There are three wallets identified to be linked to criminals. Over 125,000 Bitcoins worth $790 million were connected to the Silk Road Darknet market. No apparent movement were detected from these wallets.
Lost
Research has shown that almost 212,000 Bitcoins are found in five wallets that owners have lost their private keys. No transactions have been made from these whales since 2011. If no users could access this chunk of Bitcoins, they also form a part of the seabed that stabilizes the coin market.
Image source: pixabay - JimmyDominico
The actual amount of 'lost' Bitcoin wallets are larger than expected. In an earlier report by Chainlysis as reported on Fortune - Roberts & Rapp, almost 4,000,000 Bitcoin were considered lost. About 2.5 million Bitcoins belonged to wallets that were 'out of circulation' or the so-called 'hodlers' while another 1 million Bitcoins belonged to the legendary Satoshi Nakamoto.
Satoshi Nakamoto, the pseudonymous founder of Bitcoin: Satoshi’s fortune, scattered across many wallets, amounts to more than a million Bitcoins, which Chainalysis presumes to be lost forever.
Source: Fortune - Roberts
Bitcoin has yet to reach its total circulating supply of 21 million Bitcoins. That means that new Bitcoins are still being mined at each block, however the amount of BTC mined will gradually get smaller. 4 million Bitcoins will be mined in the next 122 years, according to calculations made on CNBC - Cheng.
Image source: pixabay - Free-Photos
Hence based on the these reports, the total number of wallets held by early adopters or lost could be representing up to 5 million dormant Bitcoins. This would mean that only 12 out of the today's 17 million Bitcoin in circulation could be actively trading.
As long as the number of Bitcoin's laying dormant outweigh actively traded Bitcoins that are being sold off, we could be expecting Bitcoin prices to remain stable and less volatile. At least in consideration of the Bitcoin whale wallets.
“That net activity demonstrates that trading whales were not selling off Bitcoin 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 a stabilizing, rather than destabilizing factor in the market...”
Source: cointelegraph - Alexandre
So the final question lies:
How likely will it be for Bitcoin whales to coordinate a sell-off, crashing Bitcoin prices?