Supply Distribution and Whale Wallets
What is Supply Distribution
Supply Distribution is the classification of Bitcoin holdings by wallet size. It analyzes who holds how much, from small wallets holding minimal amounts to massive wallets holding tens of thousands of BTC.
Unlike traditional finance where it's difficult to determine institutional investor positions, blockchain allows transparent verification of all wallet balances. The core of supply distribution analysis is using this transparency to track the accumulation and selling behavior of large investors (whales).
Classification by Wallet Size
The classification system commonly used in the on-chain analysis community is as follows:
| Classification | Holdings (BTC) | Approximate USD Value | Nature |
|---|---|---|---|
| Shrimp | < 1 BTC | Under ~$100K | Individual small investors |
| Crab | 1-10 BTC | ~$100K-1M | Individual medium investors |
| Octopus | 10-50 BTC | ~$1M-5M | High-net-worth individuals/small funds |
| Fish | 50-100 BTC | ~$5M-10M | Small institutions |
| Dolphin | 100-500 BTC | ~$10M-50M | Medium institutions |
| Shark | 500-1,000 BTC | ~$50M-100M | Large institutions/funds |
| Whale | 1,000-5,000 BTC | ~$100M-500M | Large investors |
| Humpback | 5,000+ BTC | ~$500M+ | Exchanges/institutions/mega holders |
USD values fluctuate with BTC price, so use as reference only.
Whale Behavioral Patterns
Whale Accumulation
When whale wallet holdings increase, it's a direct signal that large investors are buying. Especially when whale accumulation is observed during price declines, it can be interpreted as smart money buying the dip.
Whale Distribution
When whale wallet holdings decrease, it's a signal that large investors are selling. When whale distribution is observed during price increases, selling pressure from profit-taking may increase.
Whale Behavior and Price
| Whale Holdings | Price | Interpretation |
|---|---|---|
| Increasing | Falling/Sideways | Smart money accumulation. Bullish signal |
| Increasing | Rising | Trend confirmation. Whales adding to positions |
| Decreasing | Rising | Profit-taking. Top warning |
| Decreasing | Falling | Bearish confirmation. Whales exiting |
Shrimp Behavioral Patterns
Shrimp (small investors) behavior is often opposite to whales, and is used as a contrarian indicator.
Typical Shrimp Behavior
- Bull market peaks: Shrimp address count surges. FOMO-driven new entries.
- Bear market bottoms: Shrimp address count declines. Investors leaving after cutting losses.
Basis for Contrarian Thinking
Small investors typically enter last and leave first. Therefore, a surge in shrimp addresses can be interpreted as an overheating warning, while a sharp decline can be interpreted as a bottom signal. Of course, this is a generalization and doesn't always hold true.
Supply Concentration
Top Wallet Share
A significant portion of Bitcoin supply is concentrated in a small number of large wallets.
- Top 100 addresses: Hold approximately 15-20% of total supply
- Top 1,000 addresses: Hold approximately 30-35% of total supply
- Top 10,000 addresses: Hold approximately 55-60% of total supply
However, many of these are exchange cold wallets, representing assets of millions of customers. Individual whale concentration is lower than this.
Changes Over Time
Looking at Bitcoin's history, supply concentration has been gradually dispersing. Initially, Satoshi Nakamoto and a few others held most of it, but over time it has been distributed to more and more people.
Using BitInsight's Whale Tracking Panel
BitInsight tracks large transactions over $500,000 in real-time across BTC, ETH, SOL, and XRP four chains.
Available Information
- Transaction hash: Can verify details on blockchain explorer
- Sender address / Receiver address: Abbreviated display
- Transfer amount and USD equivalent
- Block number and timestamp
- 24-hour transaction statistics: Count, amount, and largest transaction by chain
How to Use
- Detect large transfers toward exchanges: Large transactions from whales to exchanges = selling possibility
- Exchange → Personal wallet large withdrawals: Accumulation signal
- Large transaction surge: Signal that major change is imminent in the market
- Compare activity by chain: When whale activity concentrates on a specific chain, focus on that coin
Address Count ≠ Holder Count
The biggest limitation of supply distribution analysis is that one address doesn't mean one person/institution.
- One person may hold across multiple wallets for security
- One exchange may operate thousands of addresses
- Bitcoin ETF custody wallets represent assets of hundreds of thousands of investors
Glassnode's "Entity-Adjusted" analysis attempts to mitigate this problem by grouping related addresses into single entities, but it's not perfect.
Combining with Other Indicators
Supply Distribution + Exchange Flows
When whale wallet holdings are increasing while exchange reserves are decreasing, it's a clear signal that whales are withdrawing coins from exchanges and accumulating.
Supply Distribution + HODL Waves
When long-term holding proportion in HODL Waves is increasing while whale address count is also growing, it means "big hands holding for long periods" - a strong accumulation signal.
Summary
Supply distribution analysis is a method of tracking who holds how much and how that distribution is changing by utilizing blockchain transparency. Whale accumulation is a bullish signal, distribution is a warning signal, and from a contrarian perspective, a shrimp surge can be an overheating warning. Use BitInsight's whale tracking panel to monitor large transactions in real-time.
Next article: Realized Price and Realized Market Cap - Finding the True Purchase Price