Transparency is one of the most interesting aspects of cryptocurrency, and it was the openness that attracted many early supporters to Bitcoin (BTC).
Blockchain technology makes all information related to the operation of the network accessible to anyone who wants to watch. Every known address, transaction, fee paid and other details regarding the use of multisignature and SegWit are open.
The top 15 richest Bitcoin addresses have always been the center of attention for several reasons. Some crypto researchers usually sort the best addresses in search of the footsteps of Bitcoin creator Satoshi Nakamoto. Others study data to track the maneuvers of cryptocurrencies and predict the market manipulation that results in volatile price changes in the Bitcoin price.
The best addresses have even attracted the attention of government agencies such as the U.S. Revenue Service as well as the Treasury Department.
In fact, whole businesses have been set up that specialize in obtaining additional information about cryptocurrency addresses and their potential associations. It’s no secret that the US Internal Revenue Service has hired Chainalysis and Integra FEC, two crypto-analytics firms, to track transactions.
More recently, under Treasury Secretary Steven Mnuchin, the Treasury Department is considering whether a rule on self-managed cryptocurrency wallets is needed. 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 offering. At the current price of $ 26,500, that equates to $ 28.3 billion. Although it is a large amount of Bitcoin, it is also noteworthy that the total volume of BTC on spot exchanges exceeds $ 5 billion per day.
It is important to note that the initial deposit date of an address does not mean that the entity holding the address first acquired coins on that day. The coins could be sent from another address belonging to the same entity. Therefore, the dates on which the first funds are sent to 11 addresses only since 2018 can not prove that the address holders are new in the sector.
It is also worth noting that allegedly not one of Satoshi’s 15 best addresses is owned. Researcher Sergio Lerner has shown that the blocks that Nakamoto exploits contain unique patterns known as Patoshi patterns. Although the mined BTC has not yet been moved, it has not been assigned to one address.
The top 100 addresses concentrate 15.7% of the total supply, which is quite impressive compared to the level of distribution found in traditional markets. For example, the top 20 funds that own PayPal shares together account for 19.7% of the total offering.
Five of the 15 most important addresses are known addresses of exchanges, indicating that the apparent concentration does not exist in a way that can be attributed to crypto-whales.
In addition to wallets that hold large amounts of Bitcoin in wallets, some custodians also collect BTC for numerous customers in wallets spread across multiple addresses with large amounts.
The top addresses are recent containers and do not comply with SegWit
An impressive eight of the 15 best addresses have never extracted a single satoshi. With the exclusion of the five exchange-related addresses, only 20% ever transferred their coins. This indicates a strong appearance of hardcore containers.
In addition, 11 of the 15 addresses were first used less than three years ago. Several reasons may be behind this peculiarity, including improved security measures, a change of supervisor or different ownership structures.
Only two of the top 15 (and three in the top 200) addresses are Bech32 SegWit compatible, which can significantly reduce transaction fees. This indicates that users are resistant to change despite the obvious benefits of cheaper transactions. Even more interesting is that Bitfinex’s cold wallet is second on the list, the only one that has ever had an outgoing transaction.
A few mysterious addresses hold together
The third richest address is a mystery because it contains an untouched 94,506 BTC. The address made headlines in September 2019 after Glassnode reported that 73,000 of the BTC came from Huobi’s wallet.
Many analysts have suggested that these coins were linked to the Plustoken Ponzi scheme, but these rumors were proven wrong after Chinese police seized 194,775 BTC on November 19 due to the fraudulent exchange.
Apart from the fourth largest wallet containing 79957 BTC since March 2011, 20 of the 300 best addresses are more than nine years old. Although no one can prove that these funds are lost, most accept it.
The untouched coins amount to 313,013 BTC, and only one address has been traded since its inception. Apart from the 9,000 BTC of F2Pool held at address 1J1F3U7gHrCjsEsRimDJ3oYBiV24wA8FuV, the chances are therefore that the funds of the other addresses will be effectively lost.
The fifth position as shown above was created in February 2019 and, at the outset, listed as the 81st largest address. Since then, it has accumulated regularly, adding it from as low as 1 BTC in December 2019 to 4,100 in a single transaction in June 2019. Despite being a large accumulator, it executed seven transactions, ranging from 786 BTC to 3000 BTC. Maybe even whales have bills to pay.
There are exactly 100 addresses that were first used between November 30, 2018 and December 18, 2018, containing approximately 8,000 BTC or 12,000 BTC each. These addresses are usually attributed to Coinbase Custody. The amount of the addresses is 881,471 BTC, equivalent to 96% of the exchange’s cold wallet, according to chain.info.
The new whale local top theory
Every investor feels the feeling that the advent of new Bitcoin whales is crucial for a sustained rally, although so far there has never been hard evidence of this effect.
There is a constant stream of new addresses entering the top 300. For example, 16 of them have received their first deposits in the last 30 days. Again, this is not necessarily a new entity, but an address that receives its very first BTC.
Although unusual, gaps sometimes occur for 50 or more days without newcomers joining the top 300. These periods happen to be the end of rally periods and usually follow a healthy correction.
Exactly zero of the 300 best addresses were initially used between 28 November 2019 and 09 February 2020 when BTC increased by 35%. Oddly enough, the market fell by 52% over the next 32 days.
A similar effect occurred between 18 October 2017 and 11 December 2017. During this period, BTC gained 193%, while none of the top 300 addresses were newcomers. The price drop of 34% occurred over the next 36 days.
For that, none of the 300 best addresses were started between 20 April 2017 and 07 July 2017. Meanwhile, BTC rose 111%, while a 24% crash in the course of nine days also followed.
So far, history has proven that the new whale theory makes sense: the market rises over long periods of fewer new addresses and makes it to the top 300 list of holders, as it indicates accumulation by entities that have already held positions. On the other hand, new whales can be driven by fear of missing out, which usually indicates local peaks.
Therefore, it makes sense to monitor the top addresses and data on the chain to measure potential corrections.
Every time large deposits indicate exchange, it indicates a potential sell order and is considered clumsy by traders. These movements are then compared to BTC price bottoms and bottoms in an attempt to find a correlation between whale transfers.
Whenever the market is expanding and miners in turn reduce sales, analysts expect a price correction as soon as they start moving coins again. To put things in perspective, it is 6,300 Bitcoin per week that must be absorbed by the market to avoid price impact.
Now that institutional investors have ‘arrived’, investors will be itching to see if their inflow in 2021 will continue to pick up newbie BTC.
Although 2021 seems pretty clumsy for the crypto market, there is always an unexpected price crash that results from the government’s looming regulation.
This means that it will still be important for smart investors to follow the top 15 Bitcoin addresses and the movements of crypto whales in 2021.
The views and opinions expressed here are only those of the outhor and does not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risk. You must do your own research when making a decision.