“Whales” on the crypto market: how decentralized is bitcoin

    Bitcoin whales

    Ancient web scrolls contain legends about whales - strange and powerful creatures that can destroy markets with a click of their fingers , raise and lower the value of cryptocurrency and summon dragons. But about dragons, that's not for sure.

    Who in the crypto industry are called whales, how many are they really, are they dangerous for the cryptocurrency market, and why did they even appear?


    Whales on the capry market

    Киты на рынке биткоина
    Whales on the Bitcoin market
    ☝️ [1945904]

    Whales are unique animals that are found in almost any area where there is an inequality in the distribution of resources, they are only called differently everywhere: monopolists, dominants, mastodons, etc.

    Whales appear at the stage of primary accumulation of capital and, under normal market development, gradually fade away. So, the whales of the XVI-XVII centuries were robber barons who seized the wealth of America, influencing with their help the European market.

    In the cryptocurrency market, whales appeared along with Bitcoin, and this is mainly:

    • Early miners and prophets who bought bitcoin for a couple (tens) of dollars - their wallets often “frozen” and transactions on them have not been conducted for several years;
    • Large exchanges with no less large trading reserves - carry out fabulous transactions, but usually verify accounts so as not to drive the market into panic when moving funds;
    • Investment funds - can either verify or not verify wallets, while accumulations range from a couple of hundred to several (tens) thousand bitcoins;
    • Representatives of the shadow government, about whom no one knows anything, but everyone knows that they exist and they steer bitcoin due to their savings in wallets.
    Whales in the cryptocurrency market are people who have enough cryptocurrencies to influence its value if desired.

    To determine a whale, you need to look at how many bitcoins he stores on his whale wallet. Although there is no clear criterion here, the developers of of one of the analytical services indicate that the threshold “whale is not whale” is dynamic and varies depending on the value of the cryptocurrency itself.

    So, for bitcoin at the moment, holders with 10 BTC or more coins on the account can be considered whales (although these are very small whales, dwarf ones in practice), while the owners of Ethereum will require a minimum several hundred or even thousands of coins.

    Therefore, in the “whale-not whale” scale, the main unit should not be the number of coins, but a percentage of the total capitalization that belongs to a particular person or company.

    It is noteworthy that the largest transaction in the history of bitcoin - 500,000 coins, was carried out back in 2011, when Mt. Gox was given for $ 1 bitcoin, so now it would not be the largest translation in fiat terms.

    But the record for the fiat size of the transaction so far belongs to Binance - in June 2019 they transferred $ 1.26 billion from their bitcoin wallet, paying $ 124:


    The first case of a whale attacking a cryptocurrency

    Переводы в криптовалюте
    Cryptocurrency transfers

    If you have an Instagram profile, then you they must have shouted (or rolled their eyes) at this meme:

    Загугленный интернет-мем с Медведилом
    A google Internet meme with Medvedil

    But few people know that there is a similar creature on the bitcoin market, it is called BearWhale and looks something like this:

    Картина маслом: Медвекит врывается на рынок. Автор (нам) неизвестен 
    Oil painting: Medvekit breaks into the market. The author (is) unknown to us

    The appearance of Medvekit was first registered in October 2014, when an order to sell 30,000 bitcoins at a cost of $ 300 was placed on one of the exchanges, when the official rate fluctuated around $ 320. Medvekit dipped the first cryptocurrency capitalization rate for for two days.

    In 2017, he showed up at Reddit , where he wrote a whole post saying that he had made the wrong decision and was ready to buy again with Bitcoin. By the way, specifying that he bought a cue ball for another $ 8. Those. his profit from the transaction amounted to $ 292 on each coin, or $ 8,760,000. It was wild time, which animals then just could not be found on the open spaces of the cryptocurrency market.

    Whale waves

    Хайп на крипторынке 
    Hype on the crypto market

    Although Medvekit became the first registered whale, it acted differently a whale - in fact, it just took profit, draining the asset. Tru-whales are because whales, because with each movement they create waves in the market that they use for their own benefit:

    • Pump - a whale opens an order to buy a large amount, the market reacts to increasing demand and increasing price. The amount should be such that one trader can not close such an order, then the whale has time for its timely cancellation. While the market reacts again to cancellation, the insidious whale merges its bitcoin at an inflated price.
    • Dump - a whale opens an order to sell a large amount of bitcoins, but also such that one trader could not buy it. The market reacts, and the price sags, after which the whale is purchased by the asset at a cheaper cost, and the rate returns to normal over time.

    [ 19459004]

    In general, orders can be brought to the end by simply skillfully alternating the pam-dump and taking profit. Although this is a rather old theory, and large drawdowns in the gradually growing market, whales do not often, because it scares away traders and investors. Modern whales act much more subtly, causing local fluctuations in value "in the guise of" cryptocurrency news and events. We do not even dare to suggest how complicated these schemes can be.

    All whales generate waves, but in the traditional financial sector their influence is less, because the total market capitalization is immeasurably higher, and trillions of dollars had to be concentrated in one hand in order to achieve the same effect that the owner of 10,000 bitcoins could create.

    How to track whales

    Отслеживание криптовалютных транзакций
    Tracking cryptocurrency transactions

    Since whales can trigger a volatile cryptocurrency market, whales one movement of the fin, they are trying to closely monitor them. To do this, you can use:

    WhaleAlert is a twitter account that analyzes and tracks major transactions in bitcoin blockchains and a number of major altcoins.

    Bitcoin Block Bot - a twitter account that monitors key events in the Bitcoin blockchain, including and whale transactions.

    Statistical sites like Bitinfocharts .

    What is this for? The average trader compared to a whale is no more than plankton, and a whale can cross out the results of a successful trading for several years in one transaction.

    Having received data on the movement of funds from the whale wallet in time, you can manage to protect your investments or even take advantage of the general market indignation and make money.

    Famous whales

    Эфириум киты 
    Ethereum whales

    From time to time, owners of whale purses disclose one reason or another his personality, sometimes they are immediately aware of them, sometimes they are suspected. Here are a couple of examples:

    • Zhoujianfu - this poor / non-poor whale lost 100,000 BCH and 1,550 BTC after fraudsters duplicated his SIM card and gained access to the wallet. Zhoujianfu asked Reddit for help, confirming that he is the owner of the addresses from which the funds were transferred, but we won’t show you the post because the author has already deleted it. We don’t know how this story ended, but this whale merged its wallet even though empty:
    • Joe007 - this whale surfaced in May 2020, and judging by the news, belly up. Over the past six months, his account on Bitfinex occupied the first line in the rating of the performance of traders, and the profit for the same period amounted to more than $ 60 million. According to the data of Cointelegraph Joey put down the price of Bitcoin in April 2020. , because of which he lost $ 20 million, was offended by bitcoin and closed his Twitter account.
    • Jed McCaleb is also a whale, but not Bitcoin, but Ripple . Leaving the post of project director, he retained the right to almost 6 billion tokens and according to WhaleAlert from 2014 to 2019 he sold more than 1 billion.

    [19459008 ] If McCaleb did not bring down the XPR rate, it was only because an agreement was signed between him and the company to limit the sale of coins. True, it should end soon ...

    Other alleged whales include the Winklevoss brothers, Tim Draper and even the FBI with the Fed on conspiratorial theories, though there is no information about their wallets, transactions, or the current state of the account Therefore, they are only conditional whales.

    General statistics on bitcoin wallets

    Bitcoin wallets

    Let's take statistics as an example for data analysis Bitinfocharts:

    Статистика биткоин-кошельков в мае 2020-го
    Statistics of bitcoin wallets in May 2020
    ] In short, according to their data, 42% of the total Bitcoin offer is stored at 2,145 addresses (this is slightly more than 0.01% of the total number of wallets). In monetary terms, this is more than $ 64 billion.

    Another 43% falls on wallets from 10 to 1,000 bitcoins - which is also far from an average trading portfolio. Thus, 85% of bitcoins owns only 0.57% of addresses. Recall that according to research for 2018, 82% of earthly wealth is owned by 1% of the population.

    And yet, interestingly. Here are the same data for August 2019:

    Статистика биткоин-кошельков в августе 2019-го
    Statistics of bitcoin wallets in August 2019

    According to the same indicators 75% of the total turnover belonged to 0.58% of addresses. Those. there is a trend towards the concentration of available bitcoins in the hands of whales. Although the number of major holders has decreased from 4 to 2.

    We also add that out of the 10 richest wallets, only 3 are verified as cold storage of cryptocurrency exchanges:

    ТОП-10 богатейших кошельков по данным Bitinfocharts
    TOP 10 richest wallets according to Bitinfocharts

    And most of the addresses were created or withdrawn funds relatively recently, although Bitinfocharts does not show the withdrawal amount.

    Concentration is also confirmed by analysts. So, Glassnode in their study reported that in April 2020, the concentration of bitcoin whales was the highest in the last two years and this was most likely due to halving . In an older report Diar analyzed the number of bitcoin wallets with the amount from 1,000 to 10,000 BTC in 2018-29. and it turned out that over 9 months the concentration of bitcoin on these accounts increased by 7%.

    Is it good or bad? Monopolists are dangerous for the market because they control it at their discretion, i.e. violate natural pricing and reduce the functional value of cryptocurrencies for users. On the other hand, whales stabilize the market without giving assets to inexperienced retail traders, and while they are “silent”, volatility is decreasing .

    But in our humble opinion, the damage from whales in the cryptocurrency market is much more than good, in the form of rate stabilization - because of them, bitcoin weakens both as a means of settlement and as a reliable investment object.

    Read also:

    Cryptoexchanges 2020: “paper bitcoins”, blockchain control, tokenization

    How the outflow of investors from crypto will affect the price of bitcoin

    Does bitcoin depend on the stock market?

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