Footsteps of Bitcoin and CryptoCurrency Whales II. — Ethereum Whales

2020-07-01 | CryptoCurrency.ong

“There are a significant number of new wallets in the top 10k who had their first transaction associated with fiat onramp exchanges that serve large scale customers"

Crypto whales are definitely not stopping with Bitcoin: there’s an influx of new ethereum (ETH) whales, while some of the ETH whales are also manipulate the market — this is according to Adam Cochran, an executive at the privacy-focused search engine DuckDuckGo, who manually audited the top 10,000 Ethereum addresses to learn about its liquidity, profitability, market manipulation and what the whales are doing with their money.

Unlike some other currencies, Ethereum actually gets used for a purpose. A lot of time that purpose requires depositing something into a contract, often in a trustless manner in which you still control the asset. This smart contract usage is what skews the distribution on ETH, and can make it seem like it isn’t fair.

How much do the top whales actually have?

Let’s see some stats:

• the top 10k addresses represent 91.7M ETH
• the top 100,000 addresses represent 70.7M ETH
• the top 100 addresses represent 37.8M ETH
• the top 10 addresses represent 16.6M ETH

So, roughly 17% ETH is held by 10 addresses. Some might even say that this is too high and therefore there would be some need for a centralized control, but the reason Ethereum’s distribution seems so focused is smart contracts — see above.

When you remove the smart contracts, and look at exchanges, individuals and funds, these are the numbers you get:

• the top 100 represent 26.4M ETH.
• the top 1000 represents 42.5M ETH.
• the top 10000 represents 57.2M ETH. (56.7%)

Based on individual holders, it is also interesting to note that Ethereum is equally distributed as Bitcoin:

• Bitcoin’s Top 10000 Holders: 10.54M BTC (57.44%)
• Ethereum’s Top 10000 Holders: 57.2M ETH (56.70%)

Also, let’s look at how these two stack up to other networks:

• in XRP, 16 addresses hold 55.2% of XRP.
• in BCH, 1100 addresses hold 56.8% of BCH
• in BSV, 1250 addresses hold 55.6% of BSV
• in Litecoin, 300 addresses hold 54.3% of LTC
• in Tron, 1031 addresses hold 51.1% of TRX.

According to Cochran, existing whales have increased their Ethereum positions by more than $550 million, or 4%, in the past six months (as of the time of writing this article); if you compare it to the estimated total of 600 million in new capital influx Bitcoin had across all of last year, you’ll see why it is significant. Furthermore, it is not just the existing whales who are accumulating:

“There are a significant number of new wallets in the top 10k who had their first transaction associated with fiat onramp exchanges that serve large scale customers (….) These new addresses often bought $100,000 — $250,000 worth of Ethereum, and they represent around 6% of the top 10,000 addresses” — says Cochran. New and existing whales have bought more than $650 million in new Ethereum purchases across the past half year, which is more than the entire Bitcoin inflow total in all of 2019. Also, current data indicates that those big investors don’t seem to be interested in selling their Ethereum holdings any time soon.

Cochran identified at least 6.2M ETH that is confirmed burned/lost, and another 3.8M ETH that is likely lost or burned. That means that roughly 9% of ETH is inaccessible and there is actually only around 100M ETH in circulation.

Activity, cold wallets

64.53% of top ETH was ‘active’ meaning it had been on an exchange or spent in the past 30 days. If you want to see it broken down, 14.02% was in cold wallets (1+ year idle), 9.71% was idle (31–364 days no activity), 1.76% was locked in time locked contracts — so, where 54.39% of addresses are cold (1 year+) and 39.93% of addresses are idle, with only 5.68% being active, meaning that whale accounts are very active in this down market, and many of them have been accumulating.

Right now, 33.6M ETH is deposited into exchange, with only 13.7M of that is in cold wallets, with the rest being in hot wallets — the average exchange has only around 40% of their holdings in cold reserves. It is interesting to know that Yobit, Poloniex and Bithumb rely very heavily on hot wallets; their figure can be up to 91%.

Ethereum is money, with hungry whales and unclaimed fortunes

As of now, there is only 19.5M ETH listed on exchanges for sale, even though 33.6M ETH is deposited in exchanges — which means whales are accumulating, not selling. Comparing it to this number, 58%, it has been historically more than 75%+ any time the Eth price has risen by >25%. This is the first time ever, that ETH has risen >50% and the number has been below 80%. Furthermore, 347 Genesis addresses in the top 10k failed to ever claim their ETH ICO purchase.

These idle funds are 1.7M ETH or around $340M USD. Cochran suggests that it may be worth the Ethereum community debating forking unclaimed funds in ETH2.0, staking them, and using the revenue for community based funding.

16.2M Ethereum is in “active” circulation means that in the last 90 days it passed through a payment processor, payment gateway or smart contract — in other words, Ethereum is actually being used as money. If you compare it to Bitcoin, you’ll find that 57% of it hasn’t moved in over a year (with 21% not moving since 2015). Also, only 0.36% of Bitcoin has been through a payment processor in the past two-years. When it comes to being money, Ethereum is used 440x more than Bitcoin for transacting.

Are you being played?

There are a group of at least 12 whales who seem to manipulate the market. This is how they go about:

1. first, we see an increase in people shorting ETH. It usually starts on BitFinex, and then expands to BitMex and finally other exchanges

2. these whales start sending equal batch transactions over a few days to BitFinex, Coinbase, Kraken, Bitstamp, Bitflyer

3. they make repeated small transactions so that systems like WhaleAlerts don’t pick up on the transaction.

4. then all at once, the market dumps, with them profiting on their huge shorts and buying back at a lower price.

5. once it’s done, they batch transactions back to their addresses. It sometimes takes them more than two weeks to migrate their ETH back, but, it’s always with a profit. Usually these wallets continue to buy new ETH for 4–6 weeks after their dump.

Cochran was also able to identify wallets associated with major players such as JPMorgan Chase, Reddit, IBM, Microsoft, Amazon and Walmart. 100% of these wallets are accumulating ETH. It is unclear to what end, but it is clear: they are growing at this price point and betting on ETH in some way.

Did you like our article about Ethereum Whales? Continue reading the story about XRP whales here.