Whales Have No Meaningful Impact On Ether Price – Chainalysis Report

News | May 17, 2019 By:

A third of the world’s ether, the native cryptocurrency of the ethereum blockchain, is controlled by just 376 people, according to a report released by New York-based crypto-tracker Chainalysis.

In its report, Chainalysis said that of the top 500 largest ether holders, 124 were services, and the remaining 376 were individual whales, which control 33% of the circulating supply in 2019, down from 47% in 2016.

While consistently controlling a large portion of ETH’s circulating supply, Chainalysis found that these whales account for just 7% of all economic transaction activity. They also have no meaningful impact on the price of ether, but they make the market more volatile on a daily basis with their large sell-offs.

“Funds that whales send to exchanges do not directly impact ether price but they do contribute to price volatility,” the report said. “On average, a whale that sends 1 million USD worth of ether two days ago leads to a 0.1 unit increase in intraday volatility today, which is relatively small considering values of intraday volatility range from 0.02 minimum to 417 maximum.‍”

The research firm said that these preliminary findings are consistent with the literature on stock market prices and volatility, adding that the concerns about the impact of whales on market prices have been overstated.

“We cannot rule out the possibility that whales can impact price changes within single days based on outlier events. Our research analyzed the general impact of flows from ether whales, and did not exclusively look at the impact of outlier events.”