The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market

On Nov. 12, someone moved almost 25,000 bitcoins, worth about $159 million at the time, to an online exchange. The news soon rippled through online forums, with bitcoin traders arguing about whether it meant the owner was about to sell the digital currency.

Holders of large amounts of bitcoin are often known as whales. And they’re becoming a worry for investors. They can send prices plummeting by selling even a portion of their holdings. And those sales are more probable now that the cryptocurrency is up nearly twelvefold from the beginning of the year.

About 40 percent of bitcoin is held by perhaps 1,000 users; at current prices, each may want to sell about half of his or her holdings, says Aaron Brown, former managing director and head of financial markets research at AQR Capital Management. (Brown is a contributor to the Bloomberg Prophets online column.) What’s more, the whales can coordinate their moves or preview them to a select few. Many of the large owners have known one another for years and stuck by bitcoin through the early days when it was derided, and they can potentially band together to tank or prop up the market.

“I think there are a few hundred guys,” says Kyle Samani, managing partner at Multicoin Capital. “They all probably can call each other, and they probably have.” One reason to think so: At least some kinds of information sharing are legal, says Gary Ross, a securities lawyer at Ross & Shulga. Because bitcoin is a digital currency and not a security, he says, there’s no prohibition against a trade in which a group agrees to buy enough to push the price up and then cashes out in minutes.

Bitcoin: What’s Coming in the Year Ahead

Regulators have been slow to catch up with cryptocurrency trading, so many of the rules are still murky. If traders not only pushed the price up but also went online to spread rumors, that might count as fraud. Bittrex, a digital currency exchange, recently wrote to its users warning that their accounts could be suspended if they banded together into “pump groups” aimed at manipulating prices. The law might also be different for other digital coins. Depending on the details of how they are structured and how investors expect to make money from them, some may count as currencies, according to the U.S. Securities and Exchange Commission.

Asked about whether large holders could move in concert, Roger Ver, a well-known early bitcoin investor, said in an email: “I suspect that is likely true, and people should be able to do whatever they want with their own money. I’ve personally never had time for things like that though.”

“As in any asset class, large individual holders and large institutional holders can and do collude to manipulate price,” Ari Paul, co-founder of BlockTower Capital and a former portfolio manager of the University of Chicago endowment, wrote in an electronic message. “In cryptocurrency, such manipulation is extreme because of the youth of these markets and the speculative nature of the assets.”

The recent rise in its price is difficult to explain because bitcoin has no intrinsic value. Launched in 2009 with a white paper written under a pseudonym, it’s a form of digital payment maintained by an independent network of computers on the internet‚ using cryptography to verify transactions. Its most fervent believers say it could displace banks and even traditional money, but it’s only worth what someone will trade for it, making it prey to big shifts in sentiment.

Like most hedge fund managers specializing in cryptocurrencies, Samani constantly tracks trading activity of addresses known to belong to the biggest investors in the coins he holds. (Although bitcoin transactions are designed to be anonymous, each one is associated with a coded address that can be seen by anyone.) When he sees activity, Samani immediately calls the likely sellers and can often get information on motivations behind their sales and their trading plans, he says. Some funds end up buying one another’s holdings directly, without going into the open market, to avoid affecting the currency’s price. “Investors are generally more forthcoming with other investors,” Samani says. “We all kind of know who one another are, and we all help each other out and share notes. We all just want to make money.” Ross says gathering intelligence is legal.

Ordinary investors, of course, don’t have the cachet required to get a multimillionaire to take their call. While they can track addresses with large holdings online and start heated discussions of market moves on Reddit forums, they’re ultimately in the dark on the whales’ plans and motives. “There’s no transparency to speak of in this market,” says Martin Mushkin, a lawyer who focuses on bitcoin. “In the securities business, everything that’s material has to be disclosed. In the virtual currency world, it’s very difficult to figure out what’s going on.”

Ordinary investors are at an even greater disadvantage in smaller digital currencies and tokens. Among the coins people invest in, bitcoin has the least concentrated ownership, says Spencer Bogart, managing director and head of research at Blockchain Capital. The top 100 bitcoin addresses control 17.3 percent of all the issued currency, according to Alex Sunnarborg, co-founder of crypto hedge fund Tetras Capital. With ether, a rival to bitcoin, the top 100 addresses control 40 percent of the supply, and with coins such as Gnosis, Qtum, and Storj, top holders control more than 90 percent. Many large owners are part of the teams running these projects.

Some argue this is no different than what happens in more established markets. “A good comparison is to early stage equity,” BlockTower’s Paul wrote. “Similar to those equity deals, often the founders and a handful of investors will own the majority of the asset.” Other investors say the whales won’t dump their holdings, because they have faith in the long-term potential of the coins. “I believe that it’s common sense that these whales that own so much bitcoin and bitcoin cash, they don’t want to destroy either one,” says Sebastian Kinsman, who lives in Prague and trades coins. But as prices go through the roof, that calculation might change. 

    BOTTOM LINE – It’s not necessarily illegal for big holders of some cryptocurrencies to discuss trading with one another. That puts small buyers at a disadvantage.



    1. eebest8 fiverr June 24, 2018
    2. rabbit ring vibrator June 26, 2018
    3. personal lubricant June 27, 2018
    4. super sucker ur3 June 27, 2018
    5. sex toy June 29, 2018
    6. Reforma bano Vitoria July 1, 2018
    7. treadmill reviews July 2, 2018
    8. att net email July 2, 2018
    9. sex toy lubricant July 2, 2018
    10. review July 3, 2018
    11. Adam & Eve July 5, 2018
    12. the best sex swing July 7, 2018
    13. code July 9, 2018
    14. burlington bjj July 10, 2018
    15. Arabic translation July 10, 2018
    16. hemorrhoid specialist July 11, 2018
    17. code July 11, 2018
    18. Garage door cable repair July 12, 2018
    19. Cream with snow algae July 12, 2018
    20. cash for your house July 13, 2018
    21. coupon SEXYMAMA July 13, 2018
    22. over door towel rack July 14, 2018
    23. magick July 14, 2018
    24. Startpage search engine July 15, 2018
    25. Gordon Tang July 16, 2018
    26. Gordon Tang July 16, 2018
    27. computer accessories July 19, 2018
    28. make money online July 19, 2018
    29. онлайн покер July 19, 2018
    30. thrusting vibrator July 20, 2018
    31. annabel law July 21, 2018
    32. The best face cream July 21, 2018
    33. mcse July 21, 2018
    34. Home Insurance Vancouver July 23, 2018
    35. describe gambling July 23, 2018
    36. haunted house reviews July 24, 2018
    37. tile cleaning surprise July 24, 2018
    38. first time using a dildo July 24, 2018
    39. realistic dildo July 25, 2018
    40. July 27, 2018
    41. hair extensions July 28, 2018
    42. adam and eve July 29, 2018
    43. adam and eve dildo July 30, 2018
    44. Debt management July 31, 2018
    45. Superbet August 2, 2018
    46. website August 2, 2018
    47. sex toys for men August 3, 2018
    48. candida spit test August 6, 2018
    49. class t shirt August 6, 2018
    50. orgasme vibrator August 6, 2018
    51. salt flats tour August 8, 2018
    52. male masterbation toys August 9, 2018
    53. 100 insta followers August 12, 2018
    54. Buchstaben logo erstellen August 12, 2018
    55. High Power Cleaning August 15, 2018
    56. salt flats salar de uyuni August 16, 2018
    57. The best face cream August 16, 2018

    Add Comment