1,600 Wallets Own a Third of all Bitcoin
Whales own the cryptocurrency market. Chainalysis, a well-known cryptocurrency analysis firm, has reported that over 1/3 of all Bitcoin is in only 1,600 wallets. Each of these wallets have more than 1,000 Bitcoins, with 100 of them containing over 10k Bitcoin or $75 million USD at current value.
As Chainalysis chief economist Phillip Gladwell states:
“This concentration of wealth means that bitcoin is at risk of volatility as the moves of a small number of people will have a large price effect.”
We have seen this before in numerous cases, with whales suppressing prices to buy more at lower prices or pumping prices to sell off at a massive profit. The most notable recent case has been when the trustee of Mt.Gox dumped thousands of Bitcoin on public exchanges, fueling a massive price drop.
Chainalysis has found that the amount of Bitcoin held by long-term holders has been decreasing, relative to the amount of Bitcoin held by short-term holders. This means that there has been a shift in power dynamic, with the market movement power of short-term speculators growing.
Other Cryptocurrencies in the Same Boat
Careful research from Reddit users show that the top 10 EOS wallets hold about 50% of all EOS tokens, close to 500 million tokens; meanwhile to a lesser degree, the top 400 Litecoin wallets contain 50% of all Litecoins in circulation.
It is speculated that most of these wallets are owned by exchanges who hold the cryptocurrencies when a customer transfers their tokens into the exchange for trading.
However, many analysts think that when adoption in this market grows, that cryptocurrencies will start to spread thin throughout an ever-growing quantity of wallets. But until that occurs, many will still worry about whales manipulating the marketplace, dragging prices to where these whales need them to be.