Ether is a highly concentrated cryptocurrency
A third of all ETH digital currency is held by only 376 people. These so-called crypto whales hold their assets in digital wallets, not on crypto exchanges. Kim Grauer from Chainalysis commented on the concentration of assets, saying, “The majority of whales aren’t traders. They’re mostly holding.” These whales do not move their digital currency very often because of which they do not have much influence on day to day prices of the currency.
Ethereum is now more concentrated that Bitcoin where 448 people own 20 percent of all Bitcoin. However, given the large difference in prices between the two coins, Bitcoin whales still hold a lot more valuation even with a smaller share in the overall ecosystem.
What happens when whales move?
Though whales typically like to HODL their coins in their digital wallets, they cause a small but significant stir in the market volatility when they move. A whale moving Ether from a wallet to an exchange account will be a statistically significant event in the blockchain.
Two of the strongest sentiments for Ether price movement are- Bitcoin price and investor sentiment, according to the Chainalysis report. As Bitcoin charged up by 52% in the month of May, Ether followed the lead and marked a 48% increase. This price surge could not be recorded in the latest analysis by Grauer as they collected Ether data between early 2016 and April 2019. She called it an unfortunate event as the Bull Run couldn’t be analyzed.
Grauer is now planning to turn their research into an academic paper and analyze the effect of Ether whales on the overall market. She will be discussing this data in more detail during the Consensus Blockchain Conference in New York on Wednesday. She said that the company is excited to use stock market analysis models to digital currencies.
A December report from Chainlaysis shows that only 20% of Bitcoin addresses are involved in economic activity. Between August and October 2018, the Bitcoin blockchain executed transactions valued at $41 billion of which only $9 billion were attributed to economic activity. The study also found that about 25 million addresses on the Bitcoin network were associated with private wallets.
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