As of May 1, a third of all ether, ethereum’s native cryptocurrency is owned by just 376 whales, as indicated by a recently published study by Blockchain analysis startup Chainalysis on Wednesday.
As per the report, these 376 individuals control 33 percent of the circulating supply in 2019. Remarkably a number that is down from levels seen in 2016 and 2017. While the study asserts that these whales have “no meaningful” impact on the ETH price, they do increase intraday volatility in the cryptocurrency market when they make large sell-offs.
As per Chainalysis, whales are the top 500 holders of cryptocurrency, excluding services, who store their holdings off exchanges. The findings further asserted that ether whales currently account for just 7 percent of all transaction activity. The majority (around 60 percent) of these whales aren’t active traders, meaning they are holding their assets and are not regularly trading on cryptocurrency exchanges.
Chainalysis stated that they consistently hold 25–40 percent of the circulating supply of ETH and account for only 5-18 percent of transaction volume. Using a vector autoregression (VAR) model that is commonly employed in financial time series analysis, Chainalysis further figured that ETH prices follow bitcoin (BTC) prices.
On average, a 1 percent increase in BTC price yesterday leads to a 1.1 percent increase in ETH price today. However, the study did not find a “statistically significant” impact of BTC prices on ETH’s intraday volatility. The study further analyzed the impact of whales sending and receiving funds to and from exchanges using a VAR model.
As per the finding, funds sent do impact volatility but not price, while funds received have no impact either on prices or intraday volatility. Chainalysis concluded
“These preliminary findings are consistent with the literature on stock market prices and volatility. Academics have found that large anomalous fluctuations in traded volumes of particular stocks, notably the S&P 500, tend to impact volatility and not price levels.”
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