Because Bitcoin was so obscure for much of its beginnings, and because so many bitcoins were mined early on before mining difficulty increased, the Bitcoin ecosystem contains a relatively large number of “whales,” large accounts that hold huge numbers of bitcoins. Often you’ll see a whale defined as a holder of more than 10,000 BTC, of which there over 100. That’s over $90 million in Bitcoin, and that’s a fair number of people who control that much, at least 5% of the total Bitcoin supply.
Overall about 40% of Bitcoin’s supply is controlled by about 1,000 people. And now, news that some early adopters may be touching their Bitcoin holdings has some people on edge about what may happen next.
The founder of Bitcoin, Satoshi Nakamoto, is believed to hold 1 million bitcoins in wallets he controls. But no one knows who he is, whether he is still alive, and whether he intends to touch his Bitcoin holdings. Known holdings of Satoshi haven’t been touched since the early days of Bitcoin.
But a few weeks ago, a wallet that has been dormant since 2009 suddenly moved about 50 BTC, roughly $500,000 worth of Bitcoin, and specifically coins that were created in the first month of Bitcoin’s existence. While some speculated that this was Satoshi finally dipping into his holdings, others speculated that it was someone else. One researcher calculated that a non-Satoshi miner mined over 1.8 million BTC in the early days of Bitcoin, or nearly 9% of Bitcoin’s total supply. If that miner is now moving his holdings and looking to take profits, some fear what could happen if his entire holdings are liquidated.
In reality, there’s nothing to fear here. No one with huge Bitcoin holdings is going to liquidate huge amounts because that would crash the value of the currency. If anything, small amounts will be liquidated here and there. So while in the short term some investors may be nervous about big Bitcoin sales, investors who are into investing in cryptocurrency for the long term, such as through a cryptocurrency IRA, have no need to worry that big whales will shoot themselves in the foot by divesting themselves of their Bitcoin holdings.