Recent data indicates an increasing number of Bitcoin whales are consolidating BTC – a trend that could trigger a more volatile market, according to some researchers.
Investors holding between 1,000 to 1 million Bitcoin now control 42.1% of the total BTC circulation, an increase of more than 4% since the height of the massive crypto bull run two years ago, according to Coin Metrics data reported by Bloomberg.
Additionally, the top 1,000 addresses own 34.8% of the total Bitcoin supply, an increase of nearly 0.5% from two years ago, according to Flipside Crypto, a Boston-based data analytics firm.
Some of those whale accounts are exchanges and custodians. Flipside estimates that exchanges control 5% of the total Bitcoin circulation, while Coin Metrics thinks they control 20%.
Some researchers believe the trend towards consolidation could lead to volatility. Says Eric Stone, head of data science at Flipside,
“Bitcoin will remain volatile. A few really big wallets own a lot of the currency. Exchange marketplaces are unregulated and not audited. So there’s just a lot of potential for someone who wants to manipulate the market to do so.”
Bitcoin whales have long been blamed for causing wild market swings.
Back in October, a sudden sale of 400 BTC on the crypto exchange Bitstamp was blamed for a Bitcoin breakdown from $8,056 to $7,475.