The Thousand Whales of Bitcoin

Whales

I don’t know about you, but I am going to try and connect with 1,000 new friends. NEW BEST friends actually. Why? Duh. I trade bitcoin and these 1,000 NEW friends account for 40% of the market which means………..they can move the bitcoin market. I want to be on the same side of those trades. (Of course I don’t know why they would want to be friends with me) I wouldn’t be surprised if those big holders speak to each other all the time too just to “compare notes”. BUT, remember, there are no insider trading rules (cause there’s no inside), no collusion rules and, if fact, almost NO RULES. And, by the way, that’s NOT BAD. A true free market. Anyway, gotta go, sending Linkedin/Facebook requests to some “folks”.
(Bill Taylor/CEO)


“On Nov. 12, someone moved almost 25,000 bitcoins, worth about $159 million at the time, to an online exchange. The news soon rippled through online forums, with bitcoin traders arguing about whether it meant the owner was about to sell the digital currency.

Holders of large amounts of bitcoin are often known as whales. And they’re becoming a worry for investors. They can send prices plummeting by selling even a portion of their holdings. And those sales are more probable now that the cryptocurrency is up nearly twelvefold from the beginning of the year.

About 40 percent of bitcoin is held by perhaps 1,000 users; at current prices, each may want to sell about half of his or her holdings, says Aaron Brown, former managing director and head of financial markets research at AQR Capital Management. (Brown is a contributor to the Bloomberg Prophets online column.) What’s more, the whales can coordinate their moves or preview them to a select few. Many of the large owners have known one another for years and stuck by bitcoin through the early days when it was derided, and they can potentially band together to tank or prop up the market.

“I think there are a few hundred guys,” says Kyle Samani, managing partner at Multicoin Capital. “They all probably can call each other, and they probably have.” One reason to think so: At least some kinds of information sharing are legal, says Gary Ross, a securities lawyer at Ross & Shulga. Because bitcoin is a digital currency and not a security, he says, there’s no prohibition against a trade in which a group agrees to buy enough to push the price up and then cashes out in minutes…”


Full Story at Bloomberg.com