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Could Bitcoin’ s 'Whales' Manipulate the Market?

6 months ago 3051 views

Bitcoin has captured the attention of many in the market and has witnessed a tremendous increase in popularity since its inception. The cryptocurrency was built by entrepreneurs and technology enthusiasts, who today hold most of the shares of Bitcoin. There are many who are wondering whether these so-called ‘whales’ could make use of the newcomers in the domain to their advantage. This concentration of shares is so bad that it is believed that almost 40 percent of all Bitcoins are owned by just about 1000 people. The recent fall in market value of the cryptocurrency is suggestive that a few of these majority shareholders are beginning to cash out.

A more worrying scenario that could soon turn into a reality is if the whales decide to flex their muscle and move the market with coordinated efforts. This is just a possibility and a slim one at that, as most of the early adopters of the cryptocurrency hate each other enough to refrain from making such efforts. A much more pressing issue is determining whether such actions would indeed constitute a breach of the law. Such instances of collusion do occur more frequently than you might imagine. Smaller cryptocurrencies have a much higher concentration of shares than even bitcoin. There have been instances of “pump and dump” that have been coordinated through chat forums referred to as “trollboxes”, that are known to have connections with cryptocurrency exchanges.

This shouldn’t be too pressing an issue though as most markets are manipulated by a few majority shareholders to their benefit. A point in favor of whales is that they are ideologically motivated and firmly believe that bitcoin is yet to reach its full potential. These facts somehow reduce the chances of us ever seeing such coordinated efforts to make an exit. We are yet to see how things come to pass in the world of decentralized banking, but it sure is going to be one hell of a ride.