Beneath the Crypto Currents: The Hidden Effect of Crypto “Whales”Alan Chernoff and Julapa Jagtiani No 24-14, Working Papers from Federal Reserve Bank of Philadelphia Abstract: Cryptocurrency markets are often characterized by market manipulation or, at the very least, by a sharp distinction between large and sophisticated investors and small retail investors. While traditional assets often see a divergence in the success of institutional traders and retail traders, we find an even more pronounced difference regarding the holders of Ethereum (ETH), the second-largest cryptocurrency by volume. We see a significant difference in how large holders of ETH behave compared with smaller holders of ETH relative to price movements and the volatility of the cryptocurrency. We find that large ETH holders tend to increase their ETH holdings prior to a price increase, while small ETH holders tend to reduce their ETH holdings prior to a price increase. In other words, ETH returns tend to move in the direction that benefits crypto “whales” while reducing returns (or increasing loss) to “minnows.” Additionally, we find that the volatility of ETH returns seems to be driven by small retail investors rather than by the crypto whales. Keywords: Cryptocurrency; Ethereum; ETH; crypto whales; blockchain; pump-and-dump (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedpwp:98653 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Working Papers from Federal Reserve Bank of Philadelphia Contact information at EDIRC. |
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