Market Consolidation Driven By Bitcoin Whales May Cause Additional Turbulence

Crypto research company Coin Metrics noted that Bitcoin holders with over 1,000 BTC are consolidating the total market supply of coins. The research data shows 42,1 percent of all Bitcoin is in the hands of the so-called crypto whales, raising a flag of concern among small retail Bitcoin holders. In 2017, crypto whales controlled 37,9 percent of the total amount of circulating BTC coins. That’s a four percent increase, despite the massive sale by the whales in the bearish 2018.

Another key metric, according to crypto research company Flipside Crypto, is how much of the registered Bitcoin addresses are actively trading. It turns out just 3,5% of all BTC addresses are active, meaning that whales could provoke price swings.

“Such a situation implies few crypto whales could push the price down when selling, making the whole market swing down.”, John Griffin, professor at the University of Texas, stated.

Flipside Crypto also published their research on the top 1,000 Bitcoin addresses. Data shows a slight increase in the amount of BTC contained in these wallets. However, more than 27 million crypto wallets contain ten or less BTC, most of them – abandoned or forgotten. 

Investor Aaron Brown noticed that despite the vast gap between the top Bitcoin holders and the “average Joe” in Bitcoin, addresses ranked from 10,000 to 100,000 are most likely to be in possession of individuals and companies that are not in the “Bitcoin-frenzy” and would easily part themselves with their Bitcoin belongings. 

“Despite the crypto boom, such wallets, which are only 15% of the total amount of wallet addresses, would most probably sell their Bitcoin and search for other technologies. They are not emotionally attached to Bitcoin”, Brown added. The volatility issues are what keeps Bitcoin from mass adoption, according to the specialist.

The Bitcoin market may be speculative, but the world’s top cryptocurrency doubled from the lows of the bearish winter of 2018. Looking at price swings, however, Bitcoin suffered a 74% loss in value in 2018 but made a 1,400% bullish run at the end of 2017.

While the crypto market shows signs of maturing and stability, crypto experts are certain volatility would continue to put pressure on Bitcoin. Eric Stone, Flipside’s Head of Data Science, said that despite the calm situation nowadays, few enormous wallets could cause severe turbulence in the crypto sector. 

"Exchanges are mostly unregulated and lack auditing. If some of the crypto whales decide to manipulate the market, there is nothing to stop him”, Stone added.