2018 has been bleak for the crypto industry. Many hodlers have been disenchanted with the poor performance of the market, especially so might be cryptocurrency whales.
They have every reason to be. These are individuals who became overnight millionaires in 2017 as they watched the price of Bitcoin soar unimaginably high.
The Super Rich Club
Considering that many bought the coin when it was worth nothing, they relished the fortunate happenstance of joining the club of the super rich. The excitement was palpable with apparent display of avariciousness to the extent that an exasperated Buterin felt like quitting.
In forums and other venues where Bitcoin enthusiasts meet, the discussion was mostly on the next big project. Nearly everyone was confident that the good times were here.
To the Moon and Lambo
Hodlers as cryptocurrency holders are called speculated on how high the digital currency will rise as well as on what they would do with their newly acquired wealth.
Top on the list of indulgences were fancy cars and vacations. Nearly everyone of them that could afford it had plans to buy a posh car. The favorite was a Lamborghini. A hodler must own one to be seen as accomplished. The fever was high pitch that a mini industry sprung around the desire for ‘Lambo’.
An Ominous Ban
Then September 2017 came an ominous China ban on Bitcoin. The country was just not comfortable with an intrusive currency it could not control. Hodlers held their breath at the consequence of the policy.
It passed…and Bitcoin won. The coin market continued to thrive and the Chinese forgotten despite the fact that the country continued to be home to dominant miners of Bitcoin. By December the coin was surging close to $20,000 in the wake of unprecedented pubicity.
A New-Found Path to Wealth
Everyone that knew little or nothing about monetary policies and finance were talking about the new digital gold and no one expected that the price of Bitcoin would not hit $30,000 in 2018. Some speculated that the coin will surge past the $100,000 mark but all was wishful expectations as no one reckoned with a bleeding coin market in 2018.
Bitcoin has since January lost more than 80 percent of its value plunging below $3000 from its all-time-high of $20,000 in December 2017. Altcoins such as Ethereum suffered an even more gloomy fate as most shed more than 90 percent of their January value.
Dipping Hodlers Confidence
The sustained bear market affected the confidence of many hodlers including whales. That prices have fallen for so long and so much made quite a number of whales cut their losses. Some whales hodling thousands of ether in crypto assets quietly sold them off as it became obvious that continuous hodling of digital assets was no longer the key to quick wealth.
Or is it?
Whales Took Advantage of Falling Prices
Blockchain data emanating from the Ethereum network shows that most whales hodling Ether actually bought into the dip. These have been increasing their ether stash despite the market down turn.
The result is that there is substantial increase in the volume of the cryptocurrency in possession of whales from what it was at the beginning of the year.
The study by Diar shows that 500 of the 1000 wallets owned by whales have been actively traded throughout 2018 resulting in 80 percent average increase in ETH stash in the wallets.
Whale ETH Cache Increasing
The study showed that the period covering January through November represents a time of massive increase in the proportion of Ethereum held by whales.
The research stated that the volume in possession of these whales as at November is 20 million eth valued at $2.2 billion. This constitutes 20 percent of all Ethereum in circulation. Although this is down from the previous 33 percent before 2018, smaller number of whales have actually balooned their holdings.
The Diar report stated that the new trend in which whales are amassing ether has its roots in the dismal performance of initial coin offering, the cryptocurrency fund-raising method that fin-tech startups massively adopted in 2017.
As 2018 progressed, it became obvious that most of the ICO funded projects were just avenues to raise donations for entitiesas that could not deliver on their road maps.
This coupled with the speculations that the Security and Exchange Commission is poised to roll-out sets of regulatory rules for the coin market has made many whales seek sanctuary in ether.
ICO Became Near Synonymous With Scam
Compounding issues is the influx of hundreds of scam entities launching spurious ICOs to scam investors. One of the few successes of the 2018 ICO space is Sirin Labs which successfully launches a blockchain powered smart phone FINNEY.
Had ICOs proven to be worthy investment instruments, whales may have continued using them as tools of diversification of portfolio but their poor performance no doubt led to loss of interest.
The Diar report said:
“The massive growth in Ether holdings by active whales could, and most likely is, the result of traders exiting the trading of tokens, most of which have been paired with ETH, which has plummeted by all accounts versus the start of the year.”
Even though the number of ETH wallets that qualify as whales have dropped by 30 percent, the increase in the volume of ether held by whale wallets has not correlated with new whales hodling. This infers it the remaining whales just took advantage of the falling price of ethereum to increase their store of the cryptocurrency.
That ETH cryptocurrency whales number has reduced but their hoard of the crypto increased shows that a smaller number have bought up more ETH.
Whale Culture of Strong Crypto Belief
Whales once held one-third of all ether in circulation. The fraction of their holding has reduced according to the study but smaller number of whales have simply increased their holdings ostensibly showing that these are strong believers in market rebound.
It really is interesting how the decentralized economy is turning out. It will be recalled that the concept behind cryptocurrencies was libertarian. Many of the early adopters wanted to be free from governmental influences and to some extent felt that the establishment encouraged wealth in the hands of a few.
Apparently, with the wealth in the hands of whales the crypto community seems to have take things in stride. Not everyone is happy though. The early investors in digital currencies have lost nothing even with the bearish 2018, but the late investors such as those that entered the coin market late last year have been licking their wounds.
Btc-Room101, in a contribution on the Bitcointalk forum said,
“The people at the top of all pyramid scams, can never understand why the people at the bottom that came in last are unsatisfied the people at the top are eating steaks and sleeping with the most beautiful whores, they just assume that everyone is living as such. Clearly, we have BITCOIN social inversion here where the early miners who got rich, just can’t figure out why the ‘losers’ who came in last are pissed. I have an idea of equality, how about all the rich happy guys, spread their wealth around, so the losers WIN?”
In any case, it is obvious that some whales are winners and have continued to position themselves to keep winning as a buffetted coin market eagerly awaits a resurgence of interest.
Do you think that the whales are giving us the right signal? Let’s read your views on this whale behavior in the comment box.