Every crash gives Bitcoin big players an opportunity to accumulate wealth

Last year, Bitcoin experienced a phenomenal surge, reaching an all-time high of $19,600 per Bitcoin. In the past few weeks, the price of Bitcoin plummeted to $5,900 on February 5, losing 65% of its value in a short period of time. This plunge scared away many cryptocurrency traders, but the 'richest Bitcoin holders' gained more Bitcoin due to this huge price fluctuation.

Build wealth using price fluctuations

Cryptocurrency enthusiasts understand that digital currencies often experience price fluctuations, and that over the years, there have been many traders who have been able to take advantage of these fluctuations. Essentially, if a trader can guess the price top and sell their Bitcoin, and buy it back at the bottom according to the same strategy, then this person can gain more Bitcoin. There is a particular group of Bitcoin holders who have taken advantage of these price fluctuations time and time again - they are the top 100 richest 'Bitcoin whales'. Individuals or groups of people known as Bitcoin whales hold large amounts of the cryptocurrency, and they are able to use their assets to 'move the market' at times. According to data from Bitinfochart.com, the 100 richest Bitcoin addresses did not lose money during the 65% crash - in fact, their Bitcoin holdings increased exponentially.

Accumulating more and more Bitcoin

Take an address with 167,000 Bitcoins as an example. This wallet address started collecting Bitcoins about two years ago, and the price of Bitcoin was about $840 when the address made its first deposit. Now, this wallet address has thousands of Bitcoins worth $1.4 billion. Coincidentally, this Bitcoin whale has received more Bitcoins every time the Bitcoin price has fluctuated greatly. In 2017, there were six major price adjustments in the Bitcoin price, and Bitcoin experienced a price loss of more than 30%, and this Bitcoin whale received more funds every time.

Speculative Collusion of Big Players

Many of the richest Bitcoin addresses have been dormant for years, but they follow the same pattern. These Bitcoin whales are able to capture highs and lows in value very accurately, accumulating more Bitcoin. By tracking the top 100 richest addresses, we can see that many Bitcoin addresses sold thousands of Bitcoins in November and December 2017. Bitcoin players have a lot of 'whale vision', and you can often see the dynamics involved in the market's surge and subsequent decline through forum posts and Twitter conversations. For example, on November 12, 2017, when the cryptocurrency reached an all-time price high, blockchain observers noticed that 25,000 Bitcoins were sent to Bitfinex.

The richest Bitcoin players have always been a very controversial topic, and the mainstream media likes to assume that there are 1,000 Bitcoin addresses that own more than 40% of the Bitcoin in the market. Some observers believe that these whales can communicate with each other, which can cause huge fluctuations in the Bitcoin market. Kyle Samani, managing partner of Multicoin Capital, believes this theory and said:

“I’m sure there were hundreds of guys — they probably called each other.”

Wealth Distribution

However, a research report released last fall revealed that the assumption that "1,000 people own 40% of the Bitcoin market" is wrong. According to data collected by Bambou Club, many current models of Bitcoin wealth distribution that analyze wallets and addresses are generally "invalid." According to the report, Bambou Club said that the problem with most data estimates is that they do not recognize Bitcoin owners, wallets and addresses, "which are not 1:1:1 relationships."

“That said, it is untrue to assume that a person has one wallet and only one Bitcoin address,” said transaction analysis team Bambou Club.

“First, a person can hold many Bitcoin addresses. And a wallet can use many Bitcoin addresses. (Indeed, for anonymity reasons, you can generate a new address each time you use the wallet.) So the relationship can be 1:many:many.”

Only 15 Bitcoins are needed to become a big investor?

Essentially, using different data collection methods, Bambou Club derived the global wealth distribution and the number of Bitcoin owners around the world, and then the researchers compared the wealth distribution and calculated a better analysis of Bitcoin distribution. According to this study, there are more than 25 million Bitcoin owners, and you only need 0.153 Bitcoins to be in the top 30% of the richest Bitcoin holders, and you only need "15 Bitcoins to enter the top 1%."

It is clear that Bitcoin whales continue to accumulate Bitcoin, and according to a different analytical method, the mainstream media's portrayal of the 1% is distorted. We don't know whether these Bitcoin whales are working together to cause price fluctuations or whether this fluctuation is purely due to online speculation, but what we do know is that during the various market fluctuations we have experienced in the past few years, especially the 70% crash that just happened, many of them have become bigger fish in the ocean of Bitcoin wealth distribution.