Stay connected with BizTech Community—follow us on Instagram and Facebook for the latest news and reviews delivered straight to you.
Bitcoin rarely sheds the criticism that the supply is highly concentrated in a few entities. It’s always a concern that any day, one of those large entities can manipulate the price of Bitcoin.
This criticism wasn’t at all farfetched in 2013, as entities whose individual wallets held more than 1,000 BTC accounted for approximately 62.7% of Bitcoin’s total valuation. Nevertheless, the price of BTC was not above US$20,000 at that moment as it is currently, so the accumulation process was way more reasonable in price.
Why Crypto Distribution is Matter for your Investment Strategy
Decentralization of power is fundamental to cryptocurrencies, encompassing both network control and coin ownership. This principle is especially crucial in Proof-of-Stake systems, where coin holders directly influence network operations.
Unlike traditional finance, where the concentration of power can often be opaque in nature, cryptocurrencies are offering a level of transparency never before seen. Blockchain technology allows for the exact analysis of coin distribution and, in turn, enables anybody to estimate whether a small group controls disproportionally large parts of the ecosystem. This brings a lot of transparency and allows for the consideration of exact decentralization levels with associated risks due to power centralization. This constitutes a huge improvement compared with traditional financial systems and allows for better-informed and arguably fairer governance in the field of cryptocurrency.
Classification of Bitcoin (Crypto) Holders
During the cryptocurrency market’s peak in early 2021, Glassnode analysts refined their classification of Bitcoin investors. They introduced a more detailed categorization system, likening different investor groups to marine species :
🦐 Shrimp & 🦀Crab: At the lower end of the Bitcoin holder spectrum are two categories: Crabs, owning 1-10 BTC, and Shrimps, possessing less than 1 BTC. These two groups represent the most numerous Bitcoin wallets, yet collectively control only 17% of the total Bitcoin supply.
🐟 Fish & 🐙Octopus: Fish wallets contain 50-100 Bitcoins, while Octopus wallets hold 10-50 Bitcoins. At current prices, even the smallest Octopus wallet represents an investment of around $300,000.
🦈Sharks & 🐬 Dolphins: These categories represent significant Bitcoin holders, yet their market influence remains limited. Shark addresses contain between 500-1,000 Bitcoin, while Dolphin addresses hold 100-500 Bitcoin.
🐳 Whales: In the world of cryptocurrency, two groups dominate at the top of the food chain. Many are familiar with “Whales,” but there is an even larger category known as “Humpbacks.” Humpbacks are addresses holding over 5,000 Bitcoin, while Whales hold between 1,000 and 5,000 Bitcoin. These groups typically consist of large institutions and early Bitcoin adopters, and their actions can significantly influence the market.
This classification is actually now used in all tokens and cryptos out there, but because each token has a different market cap and supply, each token will be different in classifying its holders.
Altcoin Example
| Categories | Ethereum | BNB | Cardano | Solana |
| Humpbacks | 30,000 | 40,000 | 9,000,000 | 100,000 |
| Whales | 6,000 | 8,000 | 1,800,000 | 20,000 |
| Sharks | 3,000 | 4,000 | 900,000 | 10,000 |
| Dolphins | 600 | 800 | 180,000 | 2,000 |
| Fish | 300 | 400 | 90,000 | 1,000 |
| Octopus | 60 | 80 | 18,000 | 200 |
| Crabs | 6 | 8 | 1,800 | 20 |
| Shrimps | Less than 6 | Less than 8 | Less than 1,800 | Less than 20 |
How To Detect Crypto Whales
On-chain analysis is the observing of probably the most basic means to track whales on the blockchain. The user can create inferences about the market according to the value and block size of the transaction. A high value of the transaction suggests that a huge amount of tokens is in flow, while the large block size means there is a lot of information in the transactions.
There are three major types of transaction that could give an indication of whale activity:
- Wallet to Exchange Transactions: Whenever a whale is moving their cryptocurrency from a wallet to an exchange, this typically means they are selling. If the involved asset were an altcoin, this could trigger major sell-offs and a price correction. On the other hand, if a stablecoin is what’s moved, it would most likely mean that the whale intends to buy another crypto asset.
- Exchange to Wallet Transactions: In cases when a whale is pulling out cryptocurrency from an exchange into their wallet, this usually means that the circulation of the token will increase, and that generally leads to the growth of the token’s price in general.
- Wallet-to-Wallet Transfers: These are transfers among wallets by whales and usually do not impact the market and the prices. The transactions normally hint at whales over-the-counter trading.
