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Transparency is one of the most intriguing aspects of cryptocurrency and it was this openness that attracted many early supporters to Bitcoin (BTC).
Blockchain technology makes all the information associated with the operation of the network accessible to anyone interested in taking a look. All addresses, transactions, fees paid, and other known details related to the use of multisignature and SegWit are uncovered.
The 15 richest Bitcoin addresses have always been the center of attention for several reasons. Some crypto researchers usually sort through the top addresses looking for traces of Bitcoin creator Satoshi Nakamoto. Others study the data to track the maneuvers of the crypto-whales and predict the market manipulation that results in volatile price swings in the price of Bitcoin.
Top addresses have even caught the attention of government agencies such as the US Internal Revenue Service and the Treasury Department.
In fact, entire companies specializing in obtaining additional information about cryptocurrency addresses and their potential associations have been formed. It’s no secret that the US Internal Revenue Service has hired Chainalysis and Integra FEC, two crypto analysis companies, to track transactions.
More recently, under the leadership of Treasury Secretary Steven Mnuchin, the Treasury Department is examining whether a rule on self-hosted cryptocurrency wallets is needed. If approved, these changes highlight the importance of confidentiality for market participants.
Addresses are not the same as entities
As noted above, the top 15 addresses hold 1.07 million BTC, or 5.7% of Bitcoin’s exceptional supply. At the current price point of $ 26,500, this equates to $ 28.3 billion. While this is a large amount of Bitcoin, it should also be noted that the aggregate volume of BTC on spot exchanges exceeds $ 5 billion per day.
It is important to note that the initial filing date of an address does not mean that the entity owning the address first acquired parts on that day. The parts could have been sent from another address belonging to the same entity. Therefore, the dates when the first funds were sent to 11 addresses since 2018 alone do not prove that the address holders are new to the industry.
It’s also worth noting that none of the top 15 addresses would be owned by Satoshi. Researcher Sergio Lerner has shown that the blocks mined by Nakamoto contain unique patterns known as Patoshi patterns. While this mined BTC has not yet been moved, it has not been assigned to a single address.
The top 100 addresses account for 15.7% of the total supply, which is rather impressive compared to the level of distribution observed in traditional markets. For example, the top 20 funds with PayPal shares hold a total of 19.7% of the total supply of shares.
Five of the 15 most significant addresses are known trading addresses, indicating that the apparent concentration does not exist in a way that can be attributed to crypto-whales.
In addition to exchanges holding large sums of Bitcoin in wallets, some custodians also accumulate BTC for many clients in wallets spread across multiple addresses with large sums.
The main addresses are recent owners and not conforming to SegWit
An impressive eight of the top 15 addresses have never withdrawn a single satoshi. Excluding the five addresses linked to the exchange, only 20% have ever moved their coins. This indicates a high prevalence of unconditional holders.
In addition, 11 of the 15 addresses were used for the first time less than three years ago. There could be several reasons for this quirk, including improved security measures, a change of custodian, or different ownership structures.
Only two of the top 15 addresses (and three of the top 200) are Bech32 SegWit compatible, which can significantly reduce transaction costs. This indicates that users are resistant to change despite the obvious benefits of cheaper transactions. Even more interestingly, the second-ranked Bitfinex cold wallet is the only one to ever have an outbound trade.
A few mysterious addresses are piling up
The third richest address is a mystery, as it contains 94,506 BTC intact. The address made headlines in September 2019 after Glassnode reported that 73,000 of the BTCs in the wallet came from Huobi.
Many analysts have suggested that these coins were related to the Plustoken Ponzi scheme, but these rumors turned out to be false after Chinese police seized 194,775 BTC on November 19 during the fraudulent exchange.
Aside from the fourth largest wallet containing 79,957 BTC since March 2011, 20 of the top 300 addresses are over nine years old. While no one can prove that these funds were lost, most assume it.
These intact coins amount to 313,013 BTC, and only one address has never been traded since the origin. So apart from the 9000 BTC of F2Pool held at address 1J1F3U7gHrCjsEsRimDJ3oYBiV24wA8FuV, there is a very good chance that funds from other addresses will indeed be lost.
The fifth address listed above was created in February 2019 and, at the time of creation, was listed as the 81st largest address. Since then it has been accumulating steadily, dropping from 1 BTC in December 2019 to 4,100 in a single transaction in June 2019. Although it is a large accumulator, it has completed seven transactions, ranging from 786 BTC to 3000 BTC. Maybe the whales even have bills to pay.
There are precisely 100 addresses that were first used between November 30, 2018 and December 18, 2018 containing around 8,000 BTC or 12,000 BTC each. These addresses are usually assigned to Coinbase Custody. Amounting to 881,471 BTC, address funds make up 96% of the exchange’s cold wallet, according to chain.info.
The New Local Whale Summit Theory
Every investor has a gut feeling that the arrival of new Bitcoin whales is crucial for a sustained rally, although there has never been hard evidence of this effect so far.
There is a constant stream of new addresses entering the top 300. For example, 16 of them received their very first deposit in the last 30 days. Again, this is not necessarily a new entity but an address receiving its very first BTC.
While this is rare, intervals of 50 days or more sometimes occur without new entrants reaching the top 300. Coincidentally, these periods mark the end of rally periods and a healthy correction usually follows.
Precisely zero of the top 300 addresses was initially used between November 28, 2019 and February 9, 2020, when BTC rose 35%. Oddly enough, the market plunged 52% over the next 32 days.
A similar effect occurred between October 18, 2017 and December 11, 2017. During this period, BTC rallied 193% while none of the top 300 addresses was new. A 34% price drop occurred over the next 36 days.
Previously, none of the top 300 addresses had been initiated between April 20, 2017 and July 7, 2017. Meanwhile, BTC soared 111%, while a 24% crash also followed this nine-day period. .
So far, history has proven the new whale theory to make sense: the market rallies for extended periods of fewer new addresses to climb into the top 300 holder list, as this indicates an accumulation by entities that already had a position. On the other hand, new whales might be driven by fear of missing out, which usually indicates local highs.
Therefore, it is a good idea to monitor primary addresses and chain data to assess potential corrections.
Whenever large deposits go public, it indicates a potential sell order and is viewed as bearish by traders. These movements are then compared to the highs and lows of BTC prices with the aim of finding a correlation between whale transfers.
Whenever the market recovers and miners, in turn, cut back on sales, analysts expect a price correction when they start moving coins again. To put it in perspective, that’s 6,300 Bitcoin per week that needs to be absorbed by the market to avoid the impact on prices.
Now that institutional investors have ‘arrived’, investors will be eager to see if their entries in 2021 continue to absorb the newly created BTC.
While 2021 looks rather bullish for the crypto market, there is still an unexpected price collapse that often results from threatening government regulation.
This means that it will always be important for savvy investors to keep track of the top 15 Bitcoin addresses and crypto whale movements in 2021.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.
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