Erik Weijers, a month ago

Dormant BTC waking up

In the recent week, four addresses that held a thousand Bitcoin or more woke up from a slumber and started moving their BTC. What would bring someone who held their coins a full decade to move them? Could this be a potential hack or are there more like explanations? 

On April 20, a Bitcoin whale with $176 million worth of BTC after nine years of sitting still moved $60 million worth of BTC to a new address. The whale (owner of more than one thousand BTC in one address) had purchased around six thousand BTC when the price was around $600 per coin. 

Such a 'whale sighting' is nothing remarkable. But what raised some eyebrows was that in the following days, two more whales moved big sums of BTC. One of these was from an address that had been dormant since 2011. Those were the early days. The one thousand BTC were purchased at a price of less than one dollar per coin! 

General trend of holding is intact

The first things to notice before we speculate on why some whales are moving coins: the general trend of hodling BTC isn't broken. On the contrary: the percentage of addresses with coins that haven't moved in at least five years is rising fast. The Bitcoin holder base is strong! 

So anyway, what could cause these simultaneous whale spottings, besides coincidence? Well, they could be colluding and trying to influence the price by their behavior. Trying to cause some fear in the markets. Another possibility is that they simply want to reduce the risk of one address holding a disproportionate chunk of BTC. Probably the most likely explanation. 

We leave the final possibility for last, and it's the most worrisome one.

Paper wallet key generator vulnerability?

Around 2013, there were no hardware wallets yet. People stored their private key in a file or on a piece of paper: a paper wallet. And this is by the way different from storing a seed phrase on a piece of paper. The current seed phrases are so-called hd-wallets, which represent more than one address but are an entire account, where you can store many coins. 

In 2019, it was discovered that there was a lesser-known key generator website that had a bug. This caused it to create duplicate private keys for different users. So, could the whale addresses have been hacked in this way? This is fortunately not very likely. It wouldn't explain, for example, why only part of the BTC was moved by the first whale.

An alternative but related explanation would be that whales, alarmed by exactly this explanation, start moving parts of there coins to another address as a precaution. 

Ethereum whale spotted too

(As icing on the cake of this story, an Ethereum address that had been dormant since the Ethereum Initial Coin Offering, started moving the coins for the first time. Imagine holding these 2000+ ETH, bought at the ICO price of 30 cents through 7 years of price drama!)

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