Is Bitcoin Transitioning from a Market Instrument to a Monopoly Tool?

The cryptocurrency world is abuzz with concerns about Bitcoin's evolving role in the market. Recent data suggests that Bitcoin might be on the verge of transforming from a market instrument into a monopoly tool, with significant implications for its stability and future.

Glassnode's statistics are raising eyebrows in the cryptocurrency community. The data paints a stark picture: long-term holders of Bitcoin now hold an astounding 75% of the total supply. This equates to a staggering 14.52 million BTC, and the accumulation continues. Such concentration of ownership raises questions about the decentralization that was once a hallmark of Bitcoin.

With such a high level of control over Bitcoin, these long-term holders also possess the potential to manipulate its price. This raises concerns about the cryptocurrency's core principles, as it transitions from being a decentralized, market-driven asset to one controlled by a select few.

A recent legal case involving the former head of the FTX exchange sheds light on these concerns. Caroline Ellison, during the proceedings, revealed plans to prevent Bitcoin's price from surpassing $20,000 in 2022. She even disclosed a conversation note that stated, "Keep selling BTC if it exceeds $20,000." Such revelations point to efforts to suppress Bitcoin's prices, highlighting the manipulation of its value.

This isn't the first time concerns about Bitcoin manipulation have arisen. In 2018, finance professor John Griffin and his colleagues at the University of Texas published a 118-page report outlining evidence of Bitcoin market manipulation by a single entity. The report was subsequently published in the Journal of Finance, a peer-reviewed journal.

Griffin's research from five years ago revealed that significant Bitcoin purchases occurred when the token reached specific price thresholds. It appeared that this entity set minimum prices for the cryptocurrency and maintained it at those levels. During times of extreme market sentiment, researchers observed an unusually strong lower bound for Bitcoin prices.

According to Griffin, the same mechanisms identified five years ago could still be at play today. As such, he believes that Bitcoin remains highly susceptible to manipulation.

The question that looms large is whether Bitcoin is on the path to becoming a monopoly tool, given that a small group of investors controls 75% of its coins. This rhetorical question highlights the evolving nature of the cryptocurrency market and the challenges it faces in maintaining decentralization and market integrity.