How is Bitcoin’s price driven by whales? Recently Bitcoin has witnessed extremely volatile
trades, moving even 20 per cent in a day. In fact, for the last 14 days, Bitcoin has
moved around US$3000 on an average in a day, which is a massive 9 per cent move considering
the current market price. So how is Bitcoin’s price driven with such an ease? To move any asset’s price, there must be
a strong driving force that has to come either from the bulls or the bears. In the case of
Bitcoin, this force is largely concentrated in a few hands. According to the data by CoinDesk, the no.
of large Bitcoin investors, known as Bitcoin whales (holding more than 1,000 Bitcoins),
have reached a new high of over 2100.
Single trades made by these whales are enough
to move the price, and when few whales come together, a $1000 move becomes a piece of
cake. Also, the market depth is relatively thin
for Bitcoin compared to other matured markets like forex or the stock market, which makes
is even easier to manipulate the price. So is it going to be this way forever? Well, to suppress these kinds of massive out
of the woods moves, the market still needs to attract mass participation, to dilute the
concentrated forces. Bitcoin has been around for over a decade,
but the volumes in this space has only started to pick up in the last three years. However, as the payment landscape for crypto
currencies is changing, more participation from the masses is expected within a few years,
which might help make Bitcoin more stable..