Whale Science 🐋
I did a quick estimation to figure out what kind of investment you’d need to be able to move the Bitcoin market in the short term, in a particular direction.
I looked at Gdax trading data which handled about 2.98% of all BTC trading volume on February 26th, 2018.
On February 26, between 11: 54 PM PST and 11:55 PM PST, the total volume traded on Gdax was 65 Bitcoins which was worth around $686,440 USD at the time. This resulted in a .557% increase in the price of Bitcoin.
I picked this particular minute for my example because it had visibly higher trading volume compared to the minutes before it.(See image below).
We can now estimate that the total volume of Bitcoins traded in ALL markets during that 1-minute was about 2181 Bitcoins (~23 million USD worth) from the fact 65 Bitcoins traded on Gdax represented 2.98% of all Bitcoin trade volume in the world.
The actual total volume should be lower since it is unlikely that all markets are completely efficient and received the same magnitude of above average volume like Gdax did during that 1-minute in question — But we will continue with this estimation for simplicity.
This means that during that 1-minute, $23 million USD worth of bullish trades increased total market value of Bitcoin by over $1 billion USD (.557% of $180.77 billion total value of all Bitcoins)
Crudely put — It is possible for someone with access to $23 million USD to pump the price up by .557% in one minute.
I did the same calculation for Ethereum for that exact same minute — between 11: 54 PM PST and 11:55 PM PST on February 26th, 2018.
Total volume traded on Gdax during that one minute was 120 ETH and resulted in a .41% increase in the price of Ethereum.
Gdax represented 2.97% of all ETH trades which puts the total estimated trade volume during that minute at 4040 ETH which was worth around $3.57 million USD at the time.
Therefore, we can estimate that a $3.57 million USD worth of bullish trades in Ethereum resulted in an increase of $363 million to the total market value of all ETH(.42% of $86.44 billion USD, total market value of Ethereum)
- A lot more extensive analysis is required before any conclusion can be drawn from this. In future, I’d like to look at different time cycles besides one minute and include a lot more data than just the one minute I picked on a random day to do my calculations. However, this simplified calculation does give us some idea about the sensitivity of the market.
- It would also be interesting to look at how this “whale-effect” has changed over time.
- I assume it was much cheaper to move the market when Bitcoin had a substantially smaller number of hodlers. I also do not doubt that it will get progressively more and more expensive to be able to move price.
- This may sound counter-intuitive but Bitcoin needs a lot more whales and deep pockets. It is relatively easier and cheaper for a whale to influence the market if there are not enough other big players. But with a lot of whales in the market, a single whale no longer has the same influence. For reference: There are 2,043 billionaires worldwide (Forbes) and 35 million millionaires worldwide (Credit Suisse)
- This is not meant to be a financial advice. Please invest responsibly.
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