Transparency is one of the most intriguing aspects of cryptocurrency and it was this openness that attracted many of the early supporters of Bitcoin (BTC).
Blockchain technology makes all the information associated with the operation of the network accessible to anyone interested in taking a look. All known addresses, transactions, fees paid and other details related to the multi-signature and the use of SegWit are in sight.
The 15 richest Bitcoin addresses have always been in the spotlight for several reasons. Some cryptography researchers often browse the main addresses in search of the steps of Bitcoin creator Satoshi Nakamoto. Others study data to track cryptographic whale maneuvers and predict market manipulation that results in volatile fluctuations in the price of Bitcoin.
The main addresses caught the attention of government agencies, such as the United States Internal Revenue Service and the Department of the Treasury.
In fact, entire companies specializing in obtaining additional information about cryptocurrency addresses and their potential associations have been formed. It is no secret that the US Internal Revenue Service has hired Chainalysis and Integra FEC, two cryptographic analysis companies, to track transactions.
More recently, under Treasury Secretary Steven Mnuchin, the Treasury Department is considering whether a rule on self-hosted cryptocurrency wallets is necessary or not. If approved, these changes emphasize the importance of privacy for market participants.
Addresses are not the same as entities
As shown above, the top 15 addresses hold 1.07 million BTC, or 5.7% of the outstanding Bitcoin stock. At the current price level of $ 26,500, this equates to $ 28.3 billion. While this is a large amount of Bitcoin, it is also important to note that the aggregate volume of BTC in spot exchanges exceeds $ 5 billion per day.
It is important to note that the initial deposit date for an address does not mean that the entity owning the address purchased the coins for the first time that day. The coins may have been sent from another address belonging to the same entity. Therefore, the dates showing the first sending of funds to 11 addresses since 2018 do not prove that address holders are new to the sector.
It is also important to note that none of the top 15 addresses is considered to be Satoshi’s property. Researcher Sergio Lerner showed that the blocks mined by Nakamoto contain unique patterns known as Patoshi patterns. Although this extracted BTC has not yet been moved, it has not been allocated to a single address.
The top 100 addresses account for 15.7% of the total offer, which is quite impressive compared to the level of distribution seen in traditional markets. For example, the top 20 funds that own PayPal shares hold 19.7% of the total stock of shares.
Five of the 15 most significant addresses are known exchange addresses, indicating that the apparent concentration does not exist in a way that can be attributed to crypto whales.
In addition to the exchanges that hold large amounts of Bitcoins in wallets, some custodians also accumulate BTC for several customers in wallets spread over several addresses with large sums.
Primary addresses are recent holders and are not compatible with SegWit
An impressive number of eight of the 15 main addresses never removed a single satoshi. Excluding the five addresses related to the exchange, only 20% have already moved their coins. This indicates a strong prevalence of hardcore holders.
In addition, 11 of the 15 addresses were used for the first time less than three years ago. Several reasons may be behind this awkwardness, including improved security measures, a change of custody or different ownership structures.
Only two of the top 15 (and three of the 200) addresses are compatible with Bech32 SegWit, which can significantly reduce transaction fees. This indicates that users resist change, despite the clear benefits of cheaper transactions. Even more interesting is that the Bitfinex cold wallet ranked second on the list is the only one that has had an outbound transaction.
Some mysterious addresses keep piling up
The third richest address is a mystery, as it contains an untouched 94,506 BTC. The address made headlines in September 2019, after Glassnode reported that 73,000 BTC in the portfolio were from Huobi.
Many analysts suggested that these coins were connected to the Plustoken Ponzi scheme, but these rumors were proven wrong after Chinese police seized 194,775 BTC on November 19 of the fraudulent exchange.
In addition to the fourth largest portfolio containing 79,957 BTC since March 2011, 20 of the 300 main addresses are more than nine years old. While no one can prove that these funds have been lost, most assume that they have.
These untouched currencies add up to 313,013 BTC, and only one address has been traded since the origin. Therefore, in addition to F2Pool’s 9,000 BTC kept at 1J1F3U7gHrCjsEsRimDJ3oYBiV24wA8FuV, there is a very good chance that funds from other addresses will be effectively lost.
The fifth classified address shown above was created in February 2019 and was originally listed as the 81st largest address. Since then, it has been accumulating regularly, totaling just 1 BTC in December 2019 to 4,100 in a single transaction in June 2019. Despite being a large accumulator, it has made seven transactions, ranging from 786 BTC to 3,000 BTC. Perhaps even whales have bills to pay.
There are precisely 100 addresses used for the first time between November 30, 2018 and December 18, 2018, containing about 8,000 BTC or 12,000 BTC each. These addresses are commonly assigned to Coinbase Custody. In the amount of 881,471 BTC, the resources of the addresses are equivalent to 96% of the cold wallet of the exchange, according to chain.info.
The new local whale theory
Every investor has a feeling that the arrival of new Bitcoin whales is crucial to a sustained rally, although there has never been evidence of this effect until now.
There is a steady flow of new addresses among the top 300. For example, 16 of them received their first deposits in the past 30 days. Again, this is not necessarily a new entity, but an address that receives its first BTC.
Although uncommon, intervals of 50 or more days sometimes occur without newcomers entering the top 300. Coincidentally, these periods mark the end of rally periods, and a healthy correction usually occurs.
Precisely zero of the 300 main addresses were used initially between 28 November 2019 and 9 February 2020, when BTC increased by 35%. Interestingly, the market plunged 52% in the next 32 days.
A similar effect occurred between October 18, 2017 and December 11, 2017. During this period, BTC was up 193%, while none of the top 300 addresses were newbies. A 34% price drop occurred over the next 36 days.
Prior to that, none of the top 300 addresses started between April 20, 2017 and July 7, 2017. Meanwhile, BTC skyrocketed 111%, while a drop of 24% also followed that period over nine days.
So far, history has proven that the new whale theory makes sense: the market goes up for extended periods of fewer new addresses reaching the list of the 300 largest keepers, as it indicates an accumulation of entities that already had a position. On the other hand, new whales can be carried away by the fear of losing, which usually indicates local tops.
Therefore, it makes sense to monitor primary addresses and data in the chain to assess possible corrections.
Each time large deposits enter the exchanges, this indicates a potential sales order and is considered to be bearish by traders. These movements are then compared to the highs and lows of BTC prices in an attempt to find some correlation between whale transfers.
Whenever the market is recovering and mining companies, in turn, reduce sales, analysts expect a price correction once they start moving currencies again. To put things in perspective, there are 6,300 Bitcoins a week that need to be absorbed by the market to avoid the impact of the price.
Now that institutional investors have “arrived”, investors will be eager to see if their entry in 2021 will continue to absorb the newly created BTC.
Although 2021 seems quite optimistic for the crypto market, there is always an unexpected drop in prices that usually results from the government’s regulatory threat.
This means that it will still be important for experienced investors to follow the top 15 Bitcoin addresses and the movements of crypto whales in 2021.
The views and opinions expressed here are exclusively those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You must conduct your own research when making a decision.