How Bitcoin Whales Affect the Bitcoin Market
What you need to know
B itcoin has 21 million Bitcoins in existence. One group holding a large number of bitcoins are Bitcoin Whales.
For your reference, do not confuse these with whales you see in the ocean. But these Bitcoin Whales are just as similar but in the Bitcoin space. They are the biggest investors in Bitcoin.
Cointelegraph recorded approximately 1,850 people hold a large number of Bitcoins, which is almost identical to the number of whales in the second quarter of 2016, which was several months before bitcoins halving. This is similar to today where Bitcoin’s halving is next week on May 12.
The two previous halvings were November 29, 2012, and July 10, 2016. The Bitcoin halvings occur approximately every four years.
After each halving, the price of Bitcoin rises substantially.
Bitcoin rose from $12 to $125 six months after the November 29 halving. This was a 1085% increase.
At the second halving, Bitcoin was worth $650.
18 months later, Bitcoin reached a new high just shy of $20,000. This was a 3085% increase.
This pattern and rise in the Bitcoin price should follow a similar path after the next halving that is only days away.
Bitcoin Price Predictions
According to Beincrypto, Bitcoin is expected to reach $400,000. Others have also given record highs for Bitcoin.
Even if this number is not reached, Bitcoin will reach a new all-time high based on past halvings.
Chamath Palihapitiya, the co-owner of the Golden State Warrior and founder of Social Capital believes Bitcoin will reach $1,000,000 by 2037.
In the near term, he believes Bitcoin will reach $100,000.
Wences Casares is the Founder and CEO of Xapo believes Bitcoin will reach $1,000,000 (by 2027).
Partner Jeff Pfeffer of Pfeffer Capital believes Bitcoin will reach a high of $700,000.
Jeremy Liew with Lightspeed Venture Partners has a Bitcoin target of $500,000 by 2030.
Billionaire investor Mark Yusko has a $400,000 future price target for Bitcoin.
Roger Ver an early promoter of Bitcoin and now Bitcoin Cash gives Bitcoin a price target of $100,000.
Anthony Pompliano gives Bitcoin a $100,000 target by December 2021.
Saxo Bank analyst Kay Van-Peterson give Bitcoin a $100,000 target by 2027.
CNBC regular Tom Lee co-founder of Fundstrat Global Advisers give Bitcoin a $91,000 price target in 2020.
One of these predictions may come true.
What is the Bitcoin Halving?
The Bitcoin halving happens approximately every four years coincidentally with the U.S. presidential election years.
Miners who produce Bitcoin are rewarded Bitcoin whenever a block is produced (about every 10 minutes). Originally when Bitcoin first started, 50 Bitcoins per block were given to miners as a reward. Then every four years as 210,000 blocks were mined, the block reward halves and continues to halve every four years until it becomes 0. This is expected to happen in 2040. The block reward is currently 12.5 coins per block and then decreases to 6.25 coins per block.
By 2021, over 80% of Bitcoins will be mined.
Due to the supply and demand for Bitcoin, the price technically should go higher in price.
What is a Bitcoin Whale?
A Bitcoin Whale is a term in the cryptocurrency space meaning this person or entity has accumulated a large number of bitcoins.
Bitcoin Whales are the biggest fish in the cryptocurrency space and have a great influence on the market.
As of April, Chainalysis reported Bitcoin Whales controlled $37.5 Billion in Bitcoin. This is about a third of this cryptocurrency.
Bitcoin Whales own 1,000 or more Bitcoins, and some have over 10,000 Bitcoins.
Chainalysis reported last year that there were 32 Bitcoin wallets with over 1,000,000 Bitcoin.
Recently some hedge funds have accumulated Bitcoin. The hedge funds control assets over $100 million. Some of these hedge funds are Binary Financial, Bitcoin Investment Trust, Bitcoin Reserve, Coin Capital Partners, Falcon Global Capita, Fortress, Global Advisors Bitcoin Investment Fund, and Pantera Capital.
Whales holding more Bitcoin
This past April, there were more Bitcoin Whales in years. This number reached the previous high set in August of 2019. This number increased by 11% since March 2020.
These whales see Bitcoin as the main way to increase their wealth in the years to come. Bitcoin is the gold standard for them.
The Dangers of Whales Holding Bitcoin
Bitcoin Whales can cause big price swings in the price of Bitcoin, which has happened often. They manipulate the price of Bitcoin as they want to sell their Bitcoins, which drives the price down. Then when they buy a large amount of Bitcoin, this drives the price higher.
Investopedia mentioned that with Bitcoin Whales holding so many bitcoins, this “could lead to a small number of people having controlling power over the cryptocurrency.”
Bitcoin performing well during the coronavirus and the price of Bitcoin increased as the stock market tumbled. You can find out more about Bitcoin here.
The price of Bitcoin has risen over $3000 as of this writing since March.
We will see if the third halving lives up to its expectations.
Tom Handy is a writer, investor, and father of two kids. He retired from the Army and sits on several non-profit boards. Tom is the top Yelper in his community and a top Google Guide. He’s on several social media channels and can be found on Twitter @tomhandy1 and Instagram @tomhandy1.
