In the cryptocurrency sector, Bitcoin and Ethereum which are the two largest digital assets based on market capitalization are known to rule over the entire market. A recent study sheds light on their individual distribution.
According to a study conducted by a crypto intelligence platform, there is a vast difference in the distribution of these cryptocurrencies. Amongst both, Ethereum has a significantly higher percentage of its supply held by whales as compared to Bitcoin.
As of February 26, data suggested that around 39% of the total supply of Ethereum is concentrated among large addresses i.e. whale wallets. This is in contrast to Bitcoin, where whales hold only 11% of the total supply.
Notably, contraction by holders metric aggregates the share of circulating supply by whale addresses, accounting for over 1% of the supply and investors or addressing holding between 0.1%-1%. The combination of the two metrics equates to the total concentration by large holders.
Analysts reveal that Ethereum’s large address concentration coincides with the network’s increased development activity. The staking feature remains the main highlight of the decentralized finance system following the historical Merge update.
Now, the high concentration of the asset among whales has varied implications, one of which could hint at the investors’ future outlook for the asset. Additionally, it is worth noting that as Ethereum undergoes significant developments, proponents still bet the asset might flip Bitcoin.
Another argument for this relevance could be that Ethereum is relatively cheap compared to Bitcoin, making it affordable to purchase in bulk amounts.
However, the concentration of crypto wealth in the hands of a few large holders is a very controversial topic in the digital assets sector. While some argue that it is a natural outcome of the market and that wealthy individuals should be allowed to hold large amounts of digital assets, others argue that this concentration of wealth with the majority is not a good sign. They say that the concentration of wealth goes against the spirit of the decentralization of cryptocurrencies and could even lead to market manipulation.
However, irrespective of varied opinions on the concentration of assets, the overall result is that Ethereum’s supply is significantly more concentrated in the hands of a few large holders compared to Bitcoin. Analysts say this could have serious implications for the future of the Ethereum ecosystem and its price.
The Merge was executed on September 15, 2022. This completed Ethereum’s transition to proof-of-stake consensus, officially deprecating proof-of-work and reducing energy consumption by an estimated 99.95%. It also made the Ethereum blockchain faster, more scalable, and more efficient.
After months of testing, investors are set to withdraw their staked Ethereum in March after the Shanghai upgrade goes live. The Shanghai upgrade, formally known as Ethereum Improvement Proposal 4895, would permit validators to withdraw their staked ETH from the Beacon Chain consensus layer. The Shanghai upgrade is a step toward a scalability upgrade, which would enhance the network transaction speed.
The growing love of Ethereum among investors has been observed for a while. In October, Todayq News reported data from Santiment, which revealed that wealthy cryptocurrency investors were quickly stockpiling two tokens created on the Ethereum (ETH) blockchain.
Crypto whales were reportedly snatching up Kyber Network (KNC), a blockchain-based exchange that intends to pool liquidity and enable fast exchanges between ERC-20 tokens without the use of any middlemen, according to Santiment. The intelligence company claims that despite KNC’s persistent decline, which saw the token drop over 40% of its value in less than three months, whales kept accumulating KNC.
As of writing, Ethereum is trading at $1,635.64, which is a 0.30% drop over the past day whereas Bitcoin is trading at $23,389, a 0.70% drop over the past day.