A mere 1,000 people own 40 percent of the bitcoin market, according to a report from Bloomberg. As the cryptocurrency’s value climbs to new heights, these “bitcoin whales” have even more power to sink or float the market, potentially in coordinated schemes.
Experts estimate that bitcoin whales, many of whom bought sizable quantities of the cryptocurrency in its infancy, may now want to sell as much as half of their chests given the current upswing, which would result in dramatic dips in value. Though frowned upon, and sometimes forbidden by digital currency exchanges, it is also not technically illegal for these big investors to band together into “pump groups” to manipulate prices. For example, a group may agree to collectively raise the price of bitcoin, and then cash out en masse. Bloomberg also quotes a hedge fund manager who often calls big bitcoin players to get tips on their coming trading strategies, intel that most ordinary investors wouldn’t have access to.
Whale watching has now become more than a pastime—smaller investors track the addresses of these power players and debate furiously on Reddit over whether certain moves, such as a whale transferring thousands of coins to an online exchange, might forecast coming storms in the market.
But disciples of the cryptocurrency told Bloomberg they faith in its ability to eventually become a legitimate alternative to banks and fiat currency, and so are motivated to keep its price high. The few power players also have an incentive to keep the prices climbing, and to not destroy each other, given the possibility that bitcoin could pay out even greater benefits in the future.
However, these whales will have to adapt quickly now that the Chicago Board Options Exchange will become the first traditional exchange to offer bitcoin futures later today, which introduces a host of new variables into the picture. While most whales are incentivized to see values continue on an upward trajectory, the futures market opens up more possibilities to make a profit on a downturn. As Lanre Sarumi writes in CoinDesk, “Marine life in the futures market is not as friendly. The waters are infested with killer whales.”