How do changes in the balances of "whales" wallets affect the price of bitcoin?

The bear market is changing the landscape of the cryptocurrency market - while some investors are disappointed in the prospects of new assets, others buy them at a bargain price, increasing the volume of portfolios. At the same time, the share of "digital gold" increases in the falling market, as evidenced by The coinmarketcap dominance index. Thus, in the emerging industry there is something like a period of primary accumulation of capital.

Influential market players, in the common people - "whales", periodically carry out large transactions. As the cryptocurrency market is small and still not as liquid, massive movements of digital value create significant volatility. Too sharp fluctuations in prices "make in the footsteps"of marginalists and excite the imagination of supporters of conspiracy. The latter often say that technical analysis is useless, the market is dominated not by supply and demand, but by manipulators and puppeteers, or that bitcoin is a project of American intelligence services.

How do you know how much "digital gold" whales have?

According to the BitInfoCharts service, the top ten most weighty bitcoin wallets look like the first six addresses identified. They belong to the popular crypto-exchanges Bitrix, Bitfinex, Bitstamp, Huobi and the largest in terms of trading volumes Binance. On average, each of these addresses holds 100,000 BTC (over $400 million) or 0.54% to 0.72% of the total amount of bitcoins in circulation.

The largest of the addresses belongs to the American trading platform Bitrix, which is in the top 50 in daily trading volume.

As for the distribution of bitcoins, almost half of all existing addresses balance does not exceed 0.001 BTC (that is, no more than $4):

Amounts from 0.001 to 0.01 BTC are stored at about 22% of addresses. At the same time, addresses with amounts in the range from 10 000 to 100 000 BTC are only 100. Only five addresses are stored from 100 thousand bitcoins to 1 million (in total — 571 958 BTC or more than $2.2 billion). In addition to the above five wallets exchanges, the 100 most weighty addresses contain 12.7% of the total supply of bitcoins.

Delphi Digital analysts came to the conclusion that there are more than 22 million addresses. Only 20% of them store more than $100, and the amount of more than 1 BTC is in less than 700 000 addresses.

It is noteworthy that against the background of the falling market in the period from December 17, 2018 to February 25, 2019, the total balance of the five largest wallets increased by 2 879 BTC. During the same period, the balance of the remaining addresses in the top 100 increased by 151 405 BTC.

The number of bitcoins in the third largest group (from 1 000 BTC to 10 000 BTC) for these two months decreased by 135 449 BTC. With a high probability, these funds have flowed to large players, given the growth of the balances of the last two groups.

On the same service, you can see the largest wallets, the funds on which for a long time lie motionless.

For example, the largest of them are 79 957 BTC, which came to this address back in 2011. If the owner of these funds has not lost access to the wallet and suddenly decides to sell all the coins overnight on a centralized site like Binance, this can have a serious impact on the entire market.

According to BitInfoCharts, there are more than 16 million BTC without movement, that is, most of the bitcoins in circulation (17 588 112 BTC). We can assume that many of these wallets access is lost forever. In particular, this thesis is confirmed by the study Chainalysis, which says that access to bitcoins worth $20 billion is lost forever. According to representatives of the company, the main reason for this is the loss of private keys. Consequently, the actual volume 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 "hodlers" who cherish the hope that the price of bitcoin will someday grow by tens or hundreds of times. Such long-term investors are simply waiting in the wings to sell "digital belongings" at a very high price. Consequently, there is a high probability that as the new phase of the bull market develops, many addresses will "Wake up" and from time to time there will be large sales. This is fraught not only with pressure on the price of bitcoin, but also with periods of sharp volatility growth.

It is possible that some of these "sleeping" addresses is cryptocurrency startup Xapo. According to some reports, in his specially equipped bunker can be about 7% of all existing bitcoins.

Also a huge means of control of the company Barry Silbert Grayscale Investments. For example, according to Diar, in the management of the Grayscale Bitcoin Investment Trust Fund at the end of last year there were more than 200 000 BTC, that is about 1% of the total offer of the first cryptocurrency.

According to a September study by Diar, more than 55% of all bitcoins are in wallets with a balance of over 200 BTC.

It is noteworthy that 1/3 of bitcoins from these wallets have never participated in outgoing transactions. According to the researchers, this may indicate the loss of personal keys or a strong belief in the future prospects of the cryptocurrency from its owners.

In addition, 42% of the owners of these wallets did not sell assets during the maximum price in December. At the same time, 27% have continued to increase the number of bitcoins since then.

Analysts of the Block believe that on the wallets of the exchange BitMEX is about 1% of all bitcoins. It is also known that the largest American cryptocurrency company Coinbase controls assets worth about $5 billion. In General, the balance of the largest trading platforms is 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 bitcoin balances of some large trading platforms.

This trend may indicate a decline in speculative activity and the desire of users to withdraw assets to personal wallets.

Ethereum
Another Diar study says that over the past year, more coins have appeared in Ethereum-whale wallets than in any other period in the history of the third-largest cryptocurrency by capitalization.

At the same time, analysts say, since January 2018, The number of Ethereum addresses belonging to whales has decreased by almost 30%.

At the beginning of 2017 in the purses of whales there were only 5 million ETH, a year later — 11 million, and by December 2018 — 20 million (20% of all coins in circulation). According to the researchers, the whales have increased their reserves due to the fact that a significant number of traders left the Ethereum token market.

As for the distribution, digital Delphi analysts have found that more than 80% of All Ethereum coins are stored at 7542 addresses. On each of them, the amount of more than 1000 ETH.

Thus, 6490 addresses store from 1000 ETH to 10 000 ETH, 923 — from 10 000 ETH to 100 000 UTH, 155 — from 100 000 ETH to 1 000 000 ETH, and only four — from 1 000 ETH to 10 000 ETH.

It is noteworthy that the balance of more than half of Ethereum addresses does not exceed 0.001 ETH ($0.14). Over $1 is stored in about 25% of addresses. At the same time, more than 80% of addresses own amounts exceeding 1000 ETH (> $143,000).

Thus, among the holders of the second-capitalization cryptocurrency clearly dominated by "whales".

How do "whales" affect the market?
The owner of the fourth largest bitcoin wallet recently moved the last 60 000 BTC ($240 million) from it. Withdrawal of the amount is made in parts in the period from 11: 00 to 19: 00 GMT 28 February. The size of a transaction is most often $ 1,000 BTC.

It remains unclear the main motive of the owner of the wallet-perhaps he decided to disperse his assets to avoid excessive attention, or sold bitcoins in the OTC markets. Whatever it was, the actions of this large holder could have a significant impact on the market.

As you can see, supported by the growth of volumes, the recovery of BTC price in the specified period ends abruptly-there is a jump in volatility, and then an unexpected and rather strong downward correction.

Consider the impact on the market of large transactions, which were carried out on December 5 by Coinbase. Then the largest cryptocurrency in the United States the company moved in the updated store customer funds in the amount of about $5 billion In particular, it was displaced 5% of available bitcoins of the company, 8% ether and 25% Litecoin.

As you can see on the chart below, it was December 5 that there was no particularly strong collapse — the rapid decline developed a day later. Apparently, this happened against the background of panic, which was sown with some delay by many media and Twitter accounts.

Thus, even if large cryptocurrency companies move assets between their own accounts, this can still put significant pressure on the price. The fact is that the addresses of "plump" wallets and related transactions are visible in the blockchain. Information about any movement of funds with some delay is picked up by social networks and the media, creating in an environment of inexperienced crypto — investors FUD (Fear, uncertainty and doubt - "Fear, uncertainty and doubt"). Traders ' fears are usually associated with the fact that a huge amount can be sold on any major stock exchange, provoking a market crash.

***
Since the crypto-currency market is still small (about $140 billion), a one-time sale or simply 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" hodlers " who think rationally and prefer not to sell the digital currency at a loss. As the market recovers, periods of sharp increase in volatility can be expected due to renewed 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 reserves.

On the other hand, there is an opinion that the new bull rally will attract institutional investors who will make the market less volatile. In addition, periodic increases in BTC supply initiated by hodlers can be actively absorbed by these new players, which will not allow to break the long-term upward trend.