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Research: 55% Of The Worlds Bitcoin Held in Just 1% of Wallets

· 29 Sep 2018 in Analysis

Bitcoin is a pseudo-anonymous currency since Bitcoin wallet addresses aren’t connected to users, nor are the transactions made with cryptocurrency.

Even so, it’s still possible to find out some interesting things about the people who own cryptocurrencies — even those known as whales who possess larger-than-normal quantities of it.

Diar, a currency analysis website, did that through a detailed study that found that only 1 percent of wallets hold 55 percent of all the bitcoins in the world. However, that’s not the only curious thing the company discovered.

Many Wallets Showed No Transaction History

For the study, wallets owned by whales that contained over 200 bitcoins were considered investment wallets and represented over $1 million in worth. Diar concluded 42 percent of those wallets had no outgoing transactions during the price peak that happened in December 2017.

One reasonable assumption some analysts might reach after learning about those statistics is that the owners must have lost their wallet keys, making it impossible to do anything with their bitcoins.

However, 27 percent of the investment wallets had more coins added since the last month of 2017. People arguably wouldn’t have agreed to incoming transactions that were ultimately useless due to lost keys.

Cryptocurrency Exchanges Hold Some Whale-Owned Wallets

A person’s first impression upon reading some of the statistics above is that there must be some extremely wealthy people active in the cryptocurrency sphere. That’s not necessarily untrue.

However, the Diar research showed the top five wallets owned by cryptocurrency exchanges have 3.8 percent of the total bitcoin supply. Together, those five wallets account for over $4 billion in value.

Additions to the Wallets Suggest Confidence in the Market 

Since 2007, when the Bitcoin concept was born, there have been a number of major events in Bitcoin’s history. Some are positive, such as the fact that people can now use bitcoin ATMs or buy gift cards and pizzas with the cryptocurrency. However, like almost anything else, bitcoin’s history has less-positive factors.

Bitcoin had a very rough start to 2018, and its worth between December 2017 and June 2018 dropped about 70 percent.

The evidence from Diar that over a quarter of the people holding investment wallets added to them since December 2018 suggests that even as newspaper headlines around the world predicted bitcoin’s doom, investors didn’t shy away from it.

It’s also particularly telling that some of the parties possessing the largest amounts of bitcoins kept adding to their stashes. The findings of a different study released in April by Chainalysis that indicated as much as one-third of the total bitcoin supply could rest with only 1,600 individuals. It also showed that about $30 billion worth of bitcoin got sold between December 2017 and April 2018.

Cryptocurrencies have notable impacts on the global economy, especially as they reduce the need for costly money transfers and appeal to people without bank accounts. Government officials are even considering state-sponsored cryptocurrencies, with the potential for some created jointly between multiple countries.

The fact that such a large percentage of bitcoin whales didn’t sell when they had an opportunity for big payouts during the 2017 rise is a sign that those investors have lots of patience. They believe there are still many reasons to think bitcoins have substantial promise to people who see them as assets.

Still a Significant Amount of Unmined Bitcoins

The previously mentioned study from Chainalysis believed there was 30 percent of bitcoins not yet mined. Diar’s research matched that assessment. That conclusion means if people were thinking about investing in bitcoins and hadn’t done so yet, it’s not too late to start.

Activity Sometimes Happens Unexpectedly

In early September 2018, the cryptocurrency community became abuzz about the news that a wallet with more than $1 billion worth of bitcoin in it suddenly became active after more than four years of dormancy. Whales often get blamed for strange happenings in the cryptocurrency marketplace, with some analysts believing the whales can exert manipulation.

Whale Behavior Is Hard to Predict or Explain

It makes sense that people with access to large amounts of cryptocurrency would want to do things with it, including taking action when the values rise. However, Diar’s study shows that many whales maintain what they own instead of selling and sometimes mainly add to their stores instead of getting rid of what’s there.

Although it’s difficult to rationalize what makes whales keep their bitcoins, that behavior should bring hope to all cryptocurrency investors.

When the people holding most of it stay in the game, that should make even the investors who don’t have as many Bitcoins feel positive about what’s ahead.

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