The market cap of Bitcoin has not been the same as it started from the beginning of the year. More users have been reported to join the use of the cryptocurrency and its investment. This has sent out the wrong information that Bitcoin is in possession of the majority of people. It is disappointing to report that 40% of bitcoin is in possession of only 1000 people.
This means that few people buy Bitcoin in bulk, or most of the investors who started with Bitcoin long ago had the opportunity to mine or buy many of them since it was cheaper around that time. This may be true from the fact that only 1000 people hold close to half of it. This is no different from the world resources distribution where the top eight billionaires are richer than the bottom half.
They Hold the Future of Bitcoin Price
It is said that the future of the Bitcoin price is in the hands of these 1000 people. A confirmation of few people holding the majority of Bitcoin came to light when a single person deposited 25,000 bitcoins, equivalent to $59 million on one of the online exchanger websites. As this may be a good news to the large acceptance rate of Bitcoin, this is a threat to investors who are hoping that the price will skyrocket to $1 million.
If any of the large bitcoin holders decide to sell a portion of his bitcoin, the price will be affected extremely in a bad way.
The former managing director and head of financial markets research at AQR Capital Management, Aaron Brown believes that the current bitcoin price is likely to force the holders to sell their coins. This in a way vindicates the critics of bitcoin who warns that bitcoin will rise and then fall.
The price of Bitcoin started very well from the beginning of the year, currently hanging around $14,000 to $16000.
Most of Bitcoin Addresses are Zombies
The report stating that only a few people hold the majority of Bitcoin is very surprising; however, it is not surprising that most of the generated bitcoin addresses are nothing but a mere decoration of one’s bitcoin wallet.
In 2016, bitcoinprivacy released a statistics which proved that 90 percent of bitcoin addresses have little or no transaction. The statistics was based on 16,493,488 bitcoin addresses. This was a sample statistics which revealed the true nature of what is actually going on with the bigger picture of all bitcoin addresses.
According to the stat, only few Bitcoin addresses are active for transactions.
Most of the Few Holders Know Each Other
Kyle Samani, the managing partner of Multicoin Capital shared important information that most of the holders of Bitcoin know each other very well, and it’s likely that they will all agree to sell off their bitcoin or keep it. “I think there are a few hundred guys,” says Kyle Samani. “They all probably can call each other, and they probably have.” In the light of this, it is very dangerous for the bitcoin price as the price is determined by few people who can decide to sell off in bulk.
Larger holders of assets can easily decide to manipulate price and this is no different from the 40% of the Bitcoin holders.
Roger Ver, a bitcoin investor admitted that such a decision can be made to manipulate the bitcoin price “I suspect that is likely true, and people should be able to do whatever they want with their own money. I’ve personally never had time for things like that though. As in any asset class, large individual holders and large institutional holders can and do collude to manipulate the price.”
It is likely that the cryptocurrency will continue to be controlled by few people until the rest of the available bitcoins are mined. The demand of Bitcoin is shocking, but it ends up in the hands of few.