The results from the study of Chainalysis

One-third of all the Ether in the world, which is the native crypto of Ethereum or ETH, is owned by only 376 people, as of the 1st of May, according to the indications of new research published on the 15th of May. On Wednesday, Chainalysis, which is a blockchain analysis startup, published a study, indicating that while these 376 individuals control 33% of the current supply in this year, that number is down from the levels which were seen during 2016, and 2017. Although they are handling a large portion of the circulating supply of Ethereum, the study also found that these “whales” have the responsibility for only 7% of all the transaction activities.

Chainalysis even concluded that while these individuals do not have a significant effect on the price of Ethereum, they have some contributions to market volatility when big sell-offs are actually made.

The blockchain analysis startup also defines whales as the top 500 holders of crypto, excluding service, who actually store their holdings off exchanges. It even found that Ether whales right now account for only 7% of all of the transaction activities, which we already mentioned.

These figures could be seen as an improvement in comparison with 2016 when the whales owned only 47% of the circulating supply of Ethereum.

The prices of ETH follow movements in BTC

Further on, the study found that most of these whales, about 60%, aren’t active traders, which means that they hold their assets and aren’t regularly trading on crypto exchanges.

That also means that they continually hold 25 to 40% of the circulating supply of Ethereum and account for just 5 to 18% of transaction volume, according to the blockchain analysis startup Chainalysis.

Moreover, with the use of vector autoregression or VAR model from 2016 to 2019, which is commonly utilized in financial time series analysis, the blockchain startup found that the prices of Ether follow movements in Bitcoin or BTC.

The researchers added that on average, the 1% increase in Bitcoin price from Wednesday leads to a 1.1% increase in ETH prices on Thursday. However, the study didn’t find a statistically meaningful effect of Bitcoin prices on the intraday volatility of Ethereum.

The effects of people sending and receiving funds

The study even analyzed the impacts of whales sending, as well as receiving funds to and also from exchanges with the use of a VAR model. It actually found that funds sent have an effect on volatility but not on price, while the funds which are received don’t have an effect either on prices or intraday volatility.

Chainalysis concluded that these preliminary findings are consistent with the literature on stock market prices, as well as volatility. Academics discovered that large anomalous fluctuations are present in traded volumes of particular stocks, notably the S&P 500, and they affect volatility and not price levels.

Overall, Chainalysis believes that concerns about the effect of whales on market prices were overstated, but it added that they cannot rule out the possibility that whales can affect price changes within single days based on outlier events.


Please enter your comment!
Please enter your name here