So who is manipulating the market?

Contrary to popular belief that a few holders of large bitcoin holdings can manipulate the market and create volatility, a new study has found that these people, so-called bitcoin whales, have a positive influence on the market.

«Bitcoin whales generally stabilize the market during price declines, and not the other way around. And this is true, because these people are professionals, and there is no point in drowning the market. When they need liquidity, they are more likely to use OTC trading platforms equipped to manage large transactions with minimal market impact,” the study says. 

Chainalysis used information from 32 wallets in its study, the largest of which holds $1 billion in bitcoin. The wallets belong to traders, miners, criminals and people who have lost access to them.

Nine traders controlling a total of 332,000 BTC are classified in the first category. Experts believe that these traders joined the market in 2017 and regularly traded on exchanges. Although they control more than $2 billion in BTC, only a third of them are active traders.

Miners and early investors are in the second category, which controls another 332,000 BTC. This is a group of 15 investors with "extremely low" trading activity, although they are believed to have invested heavily during the price surge in 2017.

Finally, criminals control more than 125,000 BTC, while 212,000 BTC are in lost wallets that have not been transacted since 2011.

Although researchers acknowledge that whales have enough BTC to destabilize the market if they start selling their holdings, the researchers also note that whales, on the contrary, help stabilize the market and do not affect volatility since only a few of them are active traders.

The researchers recommend further analysis to determine how large BTC holders actually interact with the market, and not make up horror stories about them.