The fact that ⅓ of all Ethereum tokens are under control of a small bunch of people was an old elephant in the room. Crypto community calls these people whales and their piece of pie consists of 7% of all economic transaction activity. In spite of the fact, the whales have a small impact on the ETH price they create price volatility. So how the whales influence the market?

First of all, even though whales control the ⅓ of ETH they don’t move the market dramatically: 124 of 500 largest holders were services, and the 376 were individuals. These 376 individual control 33% of all ETH supply in 2019. On the contrary, they controlled 46% of all ETH supply in 2016, so it becomes more decentralized. What is more, whales show low economic transaction volume: just 5%- 18% of all volume. The thing is that most of the whales are holding their ETH and don’t speculate with their tokens.

Believe it or not, but when a whale sends their ETH to exchanges, it does not influence Ether price, but they do contribute to price volatility. For example, when a whale sends 1 million USD worth in ETH, it increases daily volatility for 0.1 unit. However, when a whale sends his coins from an exchange to a private wallet, it does not affect ETH price as well as volatility.

Thus, we can conclude that the influence of whales on marketing changes is overestimated. But I don’t want to jump at conclusions saying that whales impact is not so significant. The idea of cryptocurrency is to encourage decentralization, and there should be fewer whales who can change the whole market in an instant.