Exchanges: Since the mass adoption of cryptocurrency, cryptocurrency exchanges have become one of the largest wallets of whales because they keep large amounts of cryptocurrency in their order books.

Institutions and Companies: Under CEO Michael Saylor, the software company MicroStrategy now owns more than 130,000 BTC. Other publicly traded companies such as Square and Tesla have bought a huge hoard of Bitcoin. Countries like El Salvador have also purchased a large amount of Bitcoin to add to their cash reserves. There are trustees like Greyscale that hold bitcoins on behalf of major investors.

Individuals: Many whales bought bitcoin early when its price was much lower than it is today. Crypto exchange founders Gemini, Cameron and Tyler Winklevoss invested $11 million in Bitcoin in 2013 at $141 per coin, buying more than 78,000 BTC. American venture capitalist Tim Draper bought 29,656 bitcoins at $632 apiece at a US Marshall Service auction. Barry Silbert, founder and CEO of Cryptocurrency Group, attended the same auction and took out 48,000 bitcoins.

Wrapped BTC: Currently, more than 236,000 BTC are wrapped in the ERC-20 token wrapped in Bitcoin (wBTC). These WBTCs are mostly held with custodians who maintain a 1:1 link with Bitcoin.

Satoshi Nakamoto: The mysterious and unknown Bitcoin creator deserves his own category. It is estimated that Satoshi has more than 1 million bitcoins. Although there is not a single wallet with 1 million bitcoins in it, using on-chain data shows that of the first 1.8 million or so bitcoins created for the first time, 63% were not spent, making Satoshi a multi-billionaire.

Centralization within a decentralized world
Critics of the crypto ecosystem say whales are centralizing this space, perhaps even more central than traditional financial markets. A Bloomberg report claims that 2% of accounts control more than 95% of Bitcoin. It is estimated that the world’s top 1% control 50% of global wealth, which means that wealth inequality in Bitcoin is more pervasive than it is in traditional financial systems: an accusation that breaks the notion that Bitcoin can break central hegemony.

The decentralization of the Bitcoin ecosystem has dire consequences that can make the cryptocurrency market easily manipulable.

However, statistics from Glassnode show that these numbers seem exaggerated and do not take into account the nature of addresses. There may be some degree of centralization, but this may be one of the functions of free markets. Especially when there are no market regulations and some whales understand and trust Bitcoin more than the average retail investor, this centralization is bound to happen.

Selling Wall
Sometimes, a whale places a huge order to sell a large portion of its bitcoins. They keep the price lower than other sell orders. This leads to volatility, which leads to a general decline in the price of Bitcoin in real time. This is followed by a chain reaction as people panic and start selling their bitcoins at a cheaper rate.

Bitcoin price will only stabilize when the whale withdraws large sell orders. So, the price is now where the whales want it to be so they can accumulate more coins at their desired price point. The next tactic is known as the “selling wall.”

The opposite of this tactic is known as the fear of missing out or FOMO tactic. This occurs when whales exert enormous buying pressure on the market at prices higher than the current demand, forcing bidders to raise the price of their bids so that they can sell their buy orders and execute their buy orders. However, this tactic requires large amounts of capital not required to pull off the selling wall.

Watching whale buying and selling patterns can sometimes be good indicators of price movements. There are websites like Whalemap dedicated to tracking every whale scale and Twitter handles like Whale Alert, which has been a guide for Twitter users around the world to stay up to date on whale movements.

When the whale scattered
Sixty-four of the top 100 addresses have yet to withdraw or transfer any bitcoin, which indicates that the biggest whales may be the biggest scammers in the ecosystem, ostensibly due to the profitability of their investments.

Evidence that whales remain profitable is evident from the chart above. When calculating the 30-day moving average, over the past decade whales have remained profitable more than 70% of the time. In many ways, it is their confidence in Bitcoin that underpins the price action. Being profitable (monthly in this case) for most of their investment period helps cement their belief in the group’s strategy.

Even in 2022, one of the most bearish years in Bitcoin history, exchange balances plummeted, which indicates that most HODLers are hoarding their Bitcoins. Most seasoned cryptocurrency investors refrain from holding their long-term Bitcoin investments on exchanges, using cold wallets to trade.

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Source: CoinTelegraph