Sleeping Bitcoin Whales Waking Up, A Worry For BTC Price?
Tokyo, Japan-February 2,2018: Studio shot of golden Bitcoin, virtual currency. Close-up
In five short days, three Bitcoin whales have activated addresses with thousands of BTC. The community is concerned that the rapid activation of these large BTC wallets may be due to a security flaw that affects the wallet’s private key generators and will negatively impact prices.
Old Bitcoin Wallets Awakening
The big BTC moves notably coincide with a sharp pullback in prices from the recent highs of $31,000.
Over the past week, prices have been dumping, moving down towards $27,000 and retesting critical support levels. Typically, how whales move coins between addresses and sometimes to centralized exchanges can affect sentiment, and then affect prices.
According to WhaleAlert, 6,071 BTC worth over $178.1 million was transferred on April 20. The sending address still has 3,999.99999789 BTC and the last time it was active was on October 10, 2021.
A day later, on April 21, another wallet containing 1,128 BTC of coins worth over $31.5 million moved 278 BTC. Although large, the sender address was last activated on June 1, 2021.
The last move, although recently moved as early as 15 months ago in mid-December 2021, transferred 1,000 BTC worth more than $27.5 million.
💤 💤 💤 A dormant address containing 1000 #BTC (USD 27,456,958) has just been activated after 12.0 years!
— Whale Alert (@whale_alert) 24 April 2023
It has not yet been confirmed whether the 7,349 BTC, worth over $201 million at spot rates, was moved to centralized exchanges.
Often, when coins are moved to centralized exchanges like Binance or Coinbase, the community thinks they will be liquidated; affect emotions.
Old wallet private key generator cracked? Will BTC prices fall?
An analyst observed that the sudden transfer of large chunks of BTC could be due to a bug in an old wallet private key generator that has now been exploited. If an unauthorized third party obtains a private key, they can recover the wallet and take control of all coins held by the vault.
If that happens, then old dormant wallets, including Satoshi Nakamoto’s, the founder of Bitcoin; can be compromised. Satoshi Nakamoto is believed to have 1 million BTC, which he mined in the early days of Bitcoin before disappearing.
It is widely believed that if the identity of Nakamoto is revealed and his coins are moved, BTC prices could fall due to the fear of the expected liquidation. However, it has not been verified and none of his coins have been moved.
Unless these wallets are somehow related to Mt Gox cold storage, then an old wallet generator must have been cracked.
We now have way too many 10+ year old wallets suddenly springing to life on multiple assets…
— Adam Cochran (adamscochran.eth) (@adamscochran) 24 April 2023
The situation that makes the rumor a possibility is that it is currently impossible to verify the true owner of the wallet.
The pseudonymous nature of the Bitcoin network means that until the “victim” reveals their true identity and admits that their wallet had been compromised and their storage stolen, there is no way to confirm whether this was an exploit or whether it was the actual owner who moved the coins.
Currently, chain data is drawing attention to another key dormant wallet that holds 79,957.25 BTC. The wallet was inactive from 2011 until April 24, when it began send dust transactions. The address has not transferred any amount at the time of writing.
Feature image from iStock, chart from TradingView
