An analysis from Santiment reveals a high degree of concentration of some well-known cryptocurrencies in the hands of a few holders, raising concerns about the stability of crypto markets.
Asset Concentration in Altcoins
For instance, Shiba Inu (SHIB) shows that over 62% of its supply is concentrated in just ten wallets. A similar pattern is found among other well-known altcoins, with Uniswap (UNI) at 52% and Ethereum at 51% of its supply controlled.
Risks of Concentration in Cryptocurrency
Stablecoins are not exempt either: Tether (USDT) and USD Coin (USDC) see 40.5% and 28.6% of their supply respectively tied up in a few addresses. This phenomenon underscores the risks when large holders, or 'whales', can trigger sharp price swings, exposing retail investors to significant risks.
Decentralization Approach in the Crypto Market
Santiment's findings come amid increasing calls from global regulators and institutions for decentralization as a core principle of blockchain. However, the data suggests that cryptocurrency markets remain heavily influenced by a small group of dominant holders, raising questions about the actual degree of decentralization.
Thus, the concentration of assets can have serious implications for the cryptocurrency market, threatening its democratization and stability.
