The bear market is changing the cryptocurrency market landscape - while some investors are disappointed in the prospects of new assets, others are buying them at a bargain price, increasing the volume of portfolios. At the same time, in the falling market, the share of “digital gold” rises, as evidenced by the CoinMarketCap dominance index. Thus, in the emerging industry, something like a period of primary accumulation of capital takes place.
Influential market players, in the common people - "whales", periodically carry out major transactions. Since the cryptocurrency market is small and still not so liquid, massive movements of digital value create significant volatility. Too sharp price fluctuations are “carried out in the footsteps” of marginalists and excite supporters of conspiracy. The latter often assert that technical analysis is useless, there is not demand and supply that reign in the market, but manipulators and puppeteers, or that bitcoin is a project of American special services.
Let us try to find out how much “whales” influence the market and where you can see information about the largest wallets.
As you can see, the first six addresses are identified. They belong to the popular Bittrex, Bitfinex, Bitstamp, Huobi cryptobirds and Binance, the largest in terms of trading volumes. On average, each of these addresses contains 100,000 BTC (over $ 400 million) or from 0.54% to 0.72% of the total amount of bitcoins in circulation.
The largest of the addresses belongs to the American Bittrex trading platform, which is in the top 50 in terms of daily trading volume.
As for the distribution of bitcoins, almost half of all existing addresses have a balance of less than 0.001 BTC (that is, no more than $ 4):
Amounts from 0.001 to 0.01 BTC are stored at approximately 22% of the addresses. At the same time, addresses with amounts in the range from 10,000 to 100,000 BTC are only 100. Only five addresses contain from 100 thousand bitcoins to 1 million (a total of 571,958 BTC or more than $ 2.2 billion). In addition to the five above-mentioned wallet exchanges, the 100 most weighty addresses contain 12.7% of the total bitcoin supply.
Delphi Digital analysts have concluded that there are more than 22 million bitcoin addresses. Only 20% of them store more than $ 100, and less than 700,000 addresses have an amount of more than 1 BTC.
It is noteworthy that against the background of a falling market in the period from December 17, 2018 to February 25, 2019, the aggregate balance of the five largest wallets increased by 2,879 BTC. For the same period, the balance of the remaining addresses included in the top 100 increased by 151,405 BTC.
On the same service you can see the largest wallets, the funds for which for a long time lie without moving:
According to BitInfoCharts, more than 16 million BTC are lying without movement, that is, most of the bitcoins in circulation (17 588 112 BTC). It can be assumed that access to many such wallets is lost forever. In particular, this thesis confirms the study of Chainalysis, which states that access to bitcoins in the amount of $ 20 billion has been lost forever. According to company representatives, the main reason for this is the loss of private keys. Therefore, the actual amount of bitcoins in circulation will never reach the level of 21 million BTC.
On the other hand, it is possible that many "sleeping" addresses belong to large and patient "google", who cherish the hope that the price of Bitcoin will ever grow tens or hundreds of times. Such long-term investors are simply waiting in the wings to sell their “digital belongings” at a very high price. Consequently, it is highly probable that as the new phase of the bull market develops, many addresses will “wake up” and large sales will occur from time to time. This is fraught with not only pressure on the price of Bitcoin, but also periods of sharp increase in volatility.
It is possible that behind some of these "sleeping" addresses is cryptocurrency startup Xapo. According to some data, in its specially equipped bunker there can be about 7% of all bitcoins existing today.
Also, huge funds are controlled by Barry Silbert Grayscale Investments. For example, according to Diar, at the end of last year, Grayscale Bitcoin Investment Trust managed more than 200,000 BTC, that is, about 1% of the total supply of the first cryptocurrency.
According to a Diar survey in September, more than 55% of all bitcoins are on wallets with a balance over 200 BTC.
It is noteworthy that 1/3 of Bitcoins from these wallets never participated in outgoing transactions. According to researchers, this may indicate a loss of private keys or a strong faith in the future prospects of cryptocurrency on the part of its owners.
In addition, 42% of the owners of these wallets did not sell assets during the period of maximum prices in December. At the same time, 27% have continued to increase the number of bitcoins since then.
The Block analysts are confident that about 1% of all bitcoins are on the BitMEX exchange wallets. It is also known that the assets of about $ 5 billion are controlled by the largest US cryptocurrency company Coinbase. In general, the balance of the largest trading platforms contains at least 10% of the total supply of the first cryptocurrency.
The researchers also came to the conclusion that in the second half of last year there was a tendency to decrease in bitcoin balances of some large trading floors.
This trend may indicate a decline in speculative activity and the desire of users to withdraw assets to personal wallets.
Ethereum
In another study, Diar says that more coins appeared in Ethereum-whales during the past year than in any other period in the history of the third-largest cryptocurrency capitalization.
At the same time, analysts say, since January 2018 the number of whales belonging to Ethereum addresses has decreased by almost 30%.
At the beginning of 2017, there were only 5 million ETH in whale wallets, a year later - 11 million, and by December 2018 - 20 million (20% of all coins in circulation). According to researchers, whales have increased stocks due to the fact that a significant number of traders left the market Ethereum-tokens.
As for distribution, analysts at Digital Delphi found that more than 80% of all Ethereum coins are stored at 7,542 addresses. On each of them the amounts are more than 1000 ETH.
So, 6490 addresses store from 1000 ETH to 10,000 ETH, 923 - from 10,000 ETH to 100,000 ETH, 155 - from 100,000 ETH to 1,000,000 ETH, and only four - from 1,000,000 ETH to 10,000,000 ETH .
Thus, among the holders of the second largest by capitalization of cryptocurrencies, "whales" clearly dominate.
How do “whales” influence the market?
The owner of the fourth in terms of volumes of a Bitcoin wallet has recently transferred from it the last 60,000 BTC ($ 240 million). The amount was withdrawn in parts from 11:00 to 19:00 Moscow time on February 28. The transaction size was most often 1,000 BTC.
BTC / USD Bitfinex hourly chart from TradingView
As you can see, the BTC price recovery supported by the growth in volumes sharply ends in the specified period - a jump in volatility occurs, and then an unexpected and rather strong downward correction.
Consider the impact on the market of large transactions that Coinbase carried out on December 5th. At that time, the largest US cryptocurrency company transferred customer funds worth about $ 5 billion to the new repository. In particular, 5% of the bitcoins held by the company, 8% of the broadcast and 25% of Litecoin were moved.
As can be seen on the graph below, it was precisely on December 5 that there was no particularly strong collapse - a rapid fall developed a day later. Apparently, this happened against the backdrop of panic, which, with some delay, was sown by many media and Twitter accounts.
TradingView BTC / USD Hourly Chart
Thus, even if large cryptocurrency companies move assets between their own accounts, it can still exert considerable pressure on the price. The fact is that the addresses of the “plump” wallets and the transactions associated with them are visible in the blockchain. Information about any movement of funds with some delay is picked up by social networks and the media, creating among the inexperienced cryptoinvestors FUD (Fear, uncertainty and doubt - “Fear, uncertainty and doubt”). Fears of traders are usually associated with the fact that a huge amount can be sold on any major exchange, triggering a market crash.
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Since the cryptocurrency market is still small (about $ 140 billion), a one-time sale or just a transaction for several tens of thousands of bitcoins exerts considerable pressure on it.
The significant decrease in volatility during the bearish phase of the market can be explained by the growing number of large “Khodlers” who think rationally and prefer not to sell digital currency at a loss. As the market recovers, periods of sharp increase in volatility can be expected due to the resumption of activity of long-term investors. The actions of the latter can put significant pressure on the price of Bitcoin, since there are many “sleeping” wallets with huge stocks.
On the other hand, there is a perception that a new bull rally will attract institutional investors that will make the market less volatile. In addition, the periodic increases in BTC proposals initiated by the “goders” may be actively absorbed by these new players, which will not allow them to break the long-term uptrend.
