A recent report has revealed that 1,600 investors known as Bitcoin whales hold a total of $37.5 billion in Bitcoin, which is around a third of the total Bitcoin available.
A report by Financial Times revealed that the data from Chainalysis, indicate that back in April this year, Bitcoin wallets holding at least 1,000 BTC each was 1,600. These are the whales which are mostly unidentified, control a third of the Bitcoin market.
The data further revealed that around a hundred wallets hold between 10,000 and 100,000 Bitcoin, which is around $75 million and $750 million at the current Bitcoin price. The market controlled by just a few investors, somehow goes against the decentralization of finance which Satoshi stood for, making it a bit more risky for smaller investors.
Philip Gradwell, Chainalysis chief economist, while commenting on this latest development stated that;
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 effect (on the price).
Bitcoin, which is the leading cryptocurrency in terms of market cap, reached a peak price close to $20,000 last year, with retail investors rushing into the market to cash in on the rise. However, since the start of the year, the Bitcoin price has dipped and is now down by roughly 65% below its peak price.
The data from Chainalysis showed how the early investors were able to make a profit from the market before the speculators flocked to the market at the tail end of last year. According to the data, back in November, the amount of Bitcoin that was held by long-term investors was around three times that were held by short-term investors who were frequent traders.
Those statistics changed by April this year when the amount held by long-term investors and that held by short-term traders were almost equal (6 million BTC and 5.1 million BTC respectively).
Chainalysis added that most of the long-term investors sold around $30 billion worth of BTC to the new market speculators between December and April, with over 50% of these sales taking place in December.
Gradwell added that;
This was an exceptional transfer of wealth and conditions for it to occur again are unlikely to form again soon.
Market experts have warned that the big players have opportunities to engage in market manipulation due to the fact that the market isn’t regulated yet, and the existence of over-the-counter (OTC) market will also help them with that.
Dr. Garrick Hileman, head of research at Blockchain and co-founder of Mosaic.io commented that;
A number of these larger holders do communicate with each other, they know [each other], they take stock of market activity.