Contrary to popular opinion that the minority of Bitcoin owners with large enough Bitcoin to move the market are responsible for price manipulation and volatility, a new study has revealed that these people called “Bitcoin Whales” are actually doing a service rather than a disservice to the market.
A part of the publication reads:
“They [Bitcoin Whales] appear, in aggregate, to have stabilized the market during recent price declines, rather than exacerbating price movements. This makes sense since these trading whales are professionals with no vested interest in abruptly tanking the market. When they require liquidity, traders are likely to use OTC trading platforms equipped to manage large transactions with minimal market disruption. “
The study which was conducted by Chainalysis used information from 32 Bitcoin wallets Owned by large whales with a close figure of roughly 1 million bitcoin, consisting of traders, miners, criminals and lost wallets.
Nine traders controlling a total of 332,000 BTC were in the first category. This category consisted of traders believed to have joined the market in 2017, who regularly traded on exchanges. Although they control excess of $2 billion in BTC, it was found that only a third of them actively trade.
Miners and early adopters were placed in another group that controls another 332,000 BTC. this was a group of 15 investors with “extremely low” trading activity although it is believed they invested heavily during the 2017 price surge.
Lastly, criminals were found to control more than 125,000 BTC while 212,000 BTC was found for lost wallets category which have no transaction history since 2011.
Although the researchers admit the whales hold sufficient BTC to destabilize the market should they decide to sell, the study showed they actually help to stabilise the market.
In general, the study suggests that Bitcoin whales are not responsible for market volatility because only a small percentage of those in the trader category actually trade while the other categories either have negligible or no trading history at all.
“As our taxonomy makes clear, only the traders, representing about one-third of whale assets, are actively buying and selling bitcoin. Early adopters/miners and criminals have been in a holding pattern in recent years and lost bitcoin whales have, by definition, been inactive since 2011 (and, we assume, will remain so indefinitely).”
The researchers recommend that further analysis be done to truly establish how the big BTC holders actually interact with the market rather than judge from their lifestyles or gossip.