Prices of Bitcoin and other cryptocurrencies have soared immensely this year, launching the crypto market value to beyond $2.6 trillion.
Bitcoin itself has grown stratospherically in 2021, with a 400 percent rise year-on-year, reaching a price of more than $60,000. But in the last 24 hours on Wednesday, the leading cryptocurrency dropped steeply below the closely monitored level.
On Wednesday night, Bitcoin plunged 3.19 percent further to $58,799.80, as per real-time figures on Coindesk.
In line with this severe decline, researchers discovered that the token remains concentrated among a few elite holders, which may lead to Bitcoin being “susceptible to systemic risk,” Forbes warned in a post.
Bitcoin Price Prediction: BTC Seen Dominated by Large and Concentrated Players
Forbes quoted analysts from the National Bureau of Economic Research as saying that despite the “significant attention” Bitcoin has received over the past years, the token remains “dominated by large and concentrated players.” These users, the researchers said, are either “large miners, Bitcoin holders or exchanges.”
Such a reality would make Bitcoin “susceptible to systemic risk” and that the gains achieved from its adoption would “fall disproportionately to a small set of participants.”
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The report said, analysts discovered the biggest holders of Bitcoin possess 27 percent of the entire mass of 18.6 million tokens in circulation by the end of 2020. These holders are mainly crypto exchanges and Bitcoin miners, those who oversee the Bitcoin blockchain in exchange for freshly-minted coins.
The top ten percent of these miners control 90 percent of the crypto asset’s mining capacity while 0.1 percent, or just around 50 miners, contributing 50 percent of such capacity.
Researchers Igor Makarov and Antoinette Schoar noted that this concentration means that “some of the largest addresses are controlled by the same entity.” They even disclosed that a good amount of those early mined Bitcoins are likely all held by the token’s creator Satoshi Nakamoto, but are spread across multiple addresses that reach 20,000.
They emphasized that such concentration would expose Bitcoin to what they call a “51 percent attack,” wherein miners could conspire in executing reverse transactions. That incident happened seven years ago when the Ghash.io mining pool controlled 51 percent of Bitcoin’s processing might.
Massive Bitcoin Crash Feared
With the astounding crypto rally in 2021, which brought the entire market to more than $2.5 trillion in value from around $700 billion last year, these experts fear that a massive crash is coming.
In the Forbes report, Bank of England’s deputy governor for financial stability Jon Cunliffe cautioned investors about a “massive collapse in crypto-asset prices,” which he said is a “plausible scenario.” He appealed to have Bitcoin and other cryptocurrencies regulated to prevent them to become a threat to the wider financial system.
But even with Bitcoin’s ongoing slide below $60,000, bulls remain confident about their beloved asset. They are aiming for a price within the range of $70,000 to $90,000 by the end of the first quarter next year, Forbes quoted the trading app Yield CEO Tim Frost as saying.
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