Chainalysis Finds That Bitcoin Whales Are Not the Sole Source of Market Volatility

Data from a detailed Chainalysis study found that Bitcoin whales may actually function as a stabilizing force in the market.

Who’s in Charge of the Market?

A newly published study from Chainalysis makes a strong case that Bitcoin (BTC) 00 whales are not the shadowy culprits behind the notorious volatility associated with Bitcoin and the wider cryptocurrency market. The blockchain research firm reached this conclusion by analyzing 32 of the largest bitcoin wallets, which contain a total of 1 million bitcoin worth nearly $6.3 billion.

To date, the general assumption among many traders has been that bitcoin whales impact price action by exerting their inordinate influence over the entire cryptocurrency market. Surprisingly, Chainalysis’ research goes against this common assumption by revealing that the ranks of bitcoin whales are comprised of “a diverse group,” and less than a third are actually active traders. Data also showed that these ‘trading whales’ displayed a tendency to accumulate on price declines rather than function as the sole force responsible for causing sell-offs.

Close analysis of the “trading” whales suggests that they do not significantly contribute to volatility as:

Net activity demonstrates that trading whales were not selling off Bitcoin in any mass amount, but rather were net receivers of Bitcoin from exchanges in late 2016 and 2017. This indicates that trading whales were, in aggregate, buying on declines and, consequently, were a stabilizing, rather than destabilizing factor in the market…

Recent data from a separate study also shows that bitcoin whales and institutional investors often prefer to buy and sell cryptocurrency using over-the-counter (OTC) transactions instead of dumping large amounts of cryptocurrency on a variety of exchanges.

Whale breaching and diving.

Apparently, there are only 4 Whale Species

By dividing these 32 wallets into four groups, Chainalysis was able to determine that nine of the wallets with more than 332,000 coins were controlled by traders who sprung up around 2017 and this group made regular transactions on exchanges. The second group of 15 wallets comprised mainly of miners and early adopters in charge of 332,000 coins was relatively action-free except for the occasional sales when bitcoin prices skyrocketed from 2016 to 2017.

Chainalysis concluded that the two remaining groups consisted of three wallets belonging to “criminals” in possession of more than 125,000 coins and forever “lost” wallets and with a coin value of more than $1.3 billion (212,000 BTC).  

Facts Help the FUD Dissipate

The Chainalysis report provides a fascinating insight into the detailed movements and holdings of bitcoin whales and in a market that is heavily driven by rumor and speculation, a bit of solid research that shines a correct light on market misconceptions is always a welcome treat.


On the topic of rumors, manipulation, and whales, surely the crypto-verse will wonder exactly which whale just moved
15,220 ($100,317,283) from between wallets.

Do you think Bitcoin whales drive the market — or is the Chainalysis report a better explanation for what moves the market? Share your thoughts in the comments below! 

Images and media courtesy of Shutterstock, Twitter/@WhaleAlert.

Kraken Introduces ‘Block Trading’ OTC Option for Trades of $100K or More

A short post on the Kraken blog announced a major addition to the exchange. Kraken introduced a block trading option for those who are ready to bet $100,000 or more on crypto.

Block Trades by Definition

Venture capitalists, investment firms, family offices, and high net-worth individual investors are often willing to gamble hundreds of thousands — perhaps millions— on the cryptocurrency market. Yet the current infrastructure doesn’t always allow it.

Such high-value investments are called “block trades,” and receive a category of their own because of the unique challenges they encounter. For example, when a party trades $1 million worth of Bitcoin (BTC) 00, two things happen.

One, the respective investment influences the market for that particular cryptocurrency (imagine what happens if it’s an altcoin with a lower trading volume, and not Bitcoin, that we’re talking about!). Its price swings accordingly.

Second, the investors in question cannot buy/sell all units at the same price for the same reason. Therefore, in order to keep everyone happy, the investor calls upon an intermediary — which Kraken (eponymous to a species of giant squid, by the way) has just volunteered to become.

Kraken Claims to Have What It Takes to Be the Middleman

Not everyone knows how to go about block trades, however. The mediating entity must have experience in conducting these transactions with great care to avoid price volatility. As such, Kraken claims to have the right personnel for this purpose.

The ever-growing Kraken OTC team currently has nine professional traders stationed throughout North America, Europe, and Asia. Members have a combined 100 years of trading experience working for major financial institutions such as JP Morgan, Credit Suisse, UBS, Morgan Stanley, and Merrill Lynch.

This announcement reveals that 17 cryptocurrencies are already available for trade on the exchange: 9 out of the top 10 coins, plus Augur, Ethereum Classic, Dash, ZCash, Melon, Gnosis, Iconimi, and Dogecoin.

In addition to these, Kraken also presented three popular fiat currencies to pair with crypto: the US Dollar, the Euro, and the Japanese Yen.

Block trading


The official announcement invited loaded traders to start using the new service right away by contacting the corresponding email address ([email protected]).

The respective announcement was followed by an immediate spike in trading volume on Kraken. The amount traded on the exchange rose double two times the volume prior to the announcement — approximately $160 million.

This number was adjusted one day later on September 18th to $116 million. Was it just a hit and run or did Kraken just become a favorite for cryptocurrency whales?

No, Kraken is neither the first nor the only exchange to offer cryptocurrency block trading. However, the rank #15 exchange doesn’t have that far to climb to defeat its competitors.

Do you think that block trades will bring Kraken popularity among traders? Let us know in a comment below!

Images courtesy of  Shutterstock.

ICOs Becoming Less About Masses, More About Whales

One of the benefits of ICOs is that it allows the little guy to invest in groundbreaking projects, but lately, the whales have started taking over.

One of the key aspects of cryptocurrency is decentralization. Distributed ledger technology and virtual currencies allow people to gain control of their economic actions. One of the highlights of this incredible technological revolution is that the average person can invest in some major projects via ICOs (initial coin offerings). However, things are changing as the little guy is starting to get squeezed out.

ICOs Are Booming

It is fascinating to see how ICOs are taking off this year. In 2017, there were a total of 222 projects that raised a total of $3.7 billion. That’s a drop in the bucket to the whopping 709 projects that have raised $17.7 billion so far in 2018.

To be honest, ICOs are a great way to raise revenue. It cuts out the middlemen found in traditional finance and allows people to directly support the projects they care about. Even better is the potential financial reward if the project’s coins appreciate in value.

The best feature of initial coin offerings is that most people could take part in them. While most ICOs are brutally fast, akin to the Oklahoma Land Rush, there was always the real possibility of snagging some coins for yourself. The main issue was the potential investor’s location as many countries have specific laws and regulations that pertain to ICOs.


Whales Starting to Dominate

However, it seems that the era of the little guy getting to invest may be drawing down. A lot of projects are starting to move to private sales where only the wealthiest of individuals can take part. A perfect example is Telegram, which raised a total of $1.7 billion. Such was the success of their private sales that a public sale was scrapped. One of the rounds for Telegram only allowed people willing to spend a million dollars or more to participate.

Projects are taking note of this influx of capital from whales. As the co-founder of Tel Aviv-based Orb, Uriel Peled, notes:

If you can raise money in the private sale, today it’s the best kind of ROI [return on investment] for the company because it comes with the least uncertainty and the least risk for regulations.

Overall, 37 percent of new projects offered private pre-sales, and a full 18 percent of all ICO funds raised came from private sales. While a majority of funds raised still come from public sales, these numbers do show that institutional investors with deep pockets are moving in.

There are a few reasons why the mom-and-pop investor is getting squeezed out. Private sales can circumvent regulatory issues, such as in the United States. This allows projects to ignore any potential headaches caused by differing investment laws based upon the investor’s country of origin.

Another reason is that institutional investors smell the possibility of money being made, so they’re entering the cryptocurrency sphere in greater numbers. Exchanges like Coinbase are rolling out specialized support for such investors, who have very deep pockets. An increasing amount of cryptocurrency hedge funds and venture capitalists are spending a ton of money on ICOs.

To be honest, you can expect this trend to continue. Increased governmental regulation and a greater number of institutional investors equals the little guy getting increasingly squeezed out by the whales. It may be that decentralization may end up looking a lot more like traditional investing than cryptocurrency enthusiasts expected.

Have you been shut out of an ICO due to private sales to whales? Let us know in the comments below.

Images courtesy of Shutterstock.

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