Data-Driven Analysis of Large Bitcoin Transactions
This report is produced by Huobi Research; please cite “Huobi Blockchain Data Analytics” for reference.
Abstract
Due to the transparent and immutable nature of Bitcoin network, transaction history of any address is available for lookup online. Therefore, those Transactions with large number of Bitcoins are always the delightful topic among bitcoin enthusiasts, many of whom are hoping to find some internal relationships between these transactions to facilitate their decision-making process. On the other hand, due to Bitcoin’s anonymity and the fact that Blockchain browsers cannot usually export data with the highest precision, people find it hard to identify the physical account owner behind large transactions, thus unable to systematically classify and compare these transactions records. By building BTC nodes and capturing the top 1000 bitcoin transactions records from Jan 1, 2017 to date, this article builds upon transaction analysis to provide observation summaries and insights.
Conclusions
- Since 2017, large Bitcoin transactions were most frequent in July and September of 2017, as well as February and April of 2018. Coincidentally, from the perspective of bitcoin price movement, violent pricing fluctuations were observed during these time periods. Three of these four time periods are only 10 days away from when price has reached a low point, and one occurred before the price has reached a low point.
- Among all top 1000 large transactions, 87% of BTCs have been transferred to new addresses. However, although most large transactions are to new addresses (87% of all transaction volume), these new addresses won’t hold the Bitcoins for long before further transferring them to other addresses (49% of all Bitcoin Days Destroyed); on the other hand, the small amount of Bitcoins (13% of all transaction volume) that went to previously-activated Bitcoin accounts stays a longer time in these addresses (51% of all Bitcoin Days Destroyed).
- With regard to current balance of the addresses that received large BTC transactions, only 5% of the addresses that received large transactions still holds Bitcoin to this day, while 95% of these addresses currently holds 0 Bitcoin. Once received, 89% of the addresses transferred the Bitcoins immediately within 24 hours, which means that most of the addresses that received large transactions are only intermediate transition addresses to temporarily hold the Bitcoins before further distributing them to more addresses. Large transactions generally begin with one address transferring all Bitcoins to another address, and usually end with the transferred Bitcoins distributed to more than 50 different addresses.
- Among the top 1000 large transactions, 60 transfers are related to 16 of the richest 100 Bitcoin addresses.
- Three common formats of large transactions: linear (direct) schema, snowflake schema, and onion schema.
1. Data
Capture full transaction record from January 1, 2017 to July 13, 2018
We captured data of top 1000 BTC transactions from January 1, 2017 to July 13, 2018, including TXID, address of sender/receiver, specific transaction amount, transaction date, address creation time, and etc.
Figure 1 shows the distribution of all 1000 transactions by volume. As shown in the figure, of all 1000 transactions, the maximum transaction amount is 85947 BTC; the minimum amount is 16315 BTC; average transaction amount is 31369 BTC; median is 24042 BTC; the 25th quantile and 75th quantile are 40000 BTC and 19145 BTC, respectively.
Figure 2 shows the distribution of all 1000 transactions by transaction date. Large Bitcoin transactions were most frequent during July and September of 2017, as well as February and April of 2018. Coincidentally, violent BTC pricing fluctuations were also observed during these time periods. As shown in figure 3, among the four time period mentioned above, three occurred within 10 days after the BTC price has reached a low point, and one before the price has reached a low point. (2544 USD to 1931 USD in July, 2017; 4488 USD to 3319 USD in September, 2017;19700 USD to 6114 USD in February, 2018,; 11282 USD to 6653 USD in April, 2018).
2. Large Transaction Destinations
2.1 Transaction Destinations
We categorize the addresses receiving large transactions into 3 categories:
- New addresses (addresses not activated before the large transaction).
- Old addresses ( addresses have transaction records prior to the large transaction).
- Cold storage wallets of Cryptocurrency exchanges: based on data retrieved from Bitinfocharts and Bitcoinwhoiswho, we list the four known addresses separately: Bitfinex, Binance, Bittrex and Bitstamp.
By analyzing the 1000 addresses receiving large transactions, we found that 87% of the BTCs were transferred to new addresses. To understand the underlying pattern, we further investigated these transactions from two perspectives: transactions’ Bitcoin Days Destroyed and current balance of the transaction-receiving addresses.
2.2 Bitcoin Days Destroyed
Bitcoin Day Destoryed for any given transaction is calculated by taking the number of Bitcoins in a transaction and multiplying it by the number of days it has been since those coins were last spent.
Bitcoin Days Destroyed is a measure of the transaction volume of Bitcoin. For example, if an address transfer a large amount of BTC out immediately before receiving them, the transfer will have a small Bitcoin Days Destroyed due to the short BTC possession time. In the following analysis, we will use this idea to investigate the pattern of the large transactions .
We summarized the big transfer addresses based on bitcoin day (BTC transferred in * days hold at transferred address; if this BTC transfer does not have outward transaction, then its possession time is July 13th 2018 minus the time of inward transaction.) (fig 5).
Figure 5 shows the overall Bitcoin Days Destroyed of each address category. Comparing this with figure 4, although new addresses received 87% of the large transactions, they do not hold the BTC for long before transferring them to other addresses (51% of all Bitcoin Days Destroyed); On the other hand, the 13% BTC that went to cold storage of Crypto Exchanges or old addresses actually stayed much longer time in these wallets (49% of all Bitcoin Days Destroyed).
2.3 Current Balance
Only 5% of the 1000 addresses that received large transactions still holds BTC, while 95% of these addresses currently has a zero balance.Once received, 89% of the addresses transferred the Bitcoins immediately within 24 hours, which means that most of the addresses that received large transactions are only intermediate transition addresses to temporarily hold the Bitcoins before further distributing them to more addresses.
2.4 Number of Transactions
With regard to the 95% of the addresses with zero balance in 2.3, we further investigated how BTC were transferred out. As shown in figure 8.1 and 8.2, we discovered that these addresses generally transfer out all BTC through one single transaction, and more than half of the time these BTC will be further distributed to more than 50 addresses.
2.5 Large Transactions and Richest Bitcoin Addresses
Among the largest 1000 BTC transactions, 60 are related to 16 of the the richest 100 Bitcoin addresses. Among these 16 addresses, 5 are cold storage addresses of Cryptocurrency exchanges, 4 had transaction history prior to the large transactions, and 7 are new addresses.
3. Three Common Types of Large Transactions
After studying the largest 1000 BTC transactions between January 1st 2017 and July 13rd 2018, Huobi Research has summarized three common formats of large transactions: Linear (direct) schema, snowflake schema and onion schema.
3.1 Linear Schema
Often used in transactions between cold storages and hot wallets, or large BTC purchase by institutions/individuals. The transaction usually follows a linear structure of transaction and remains in the destination address large ( aka. large Bitcoin Days Destroyed). For example, on Feb 24th, 2018, 16ftSEQ4ctQFDtVZiUBusQUjRrGhM3JYwe (Binance’s cold storage address) received 16,510 BTC, and the BTC was held in the address until today.
3.2 Snowflake Schema
After one address receives a large transfer, a snowflake schema means that, after the initial transaction, the fund will be divided into multiple transactions almost evenly and be distributed to different addresses (usually within 1 day), in which these addresses will further distribute the fund evenly to various sub-addresses, bear resemblance to the structure of a snowflake.
For example, on July 8th 2018, after receiving 33,267 BTCs, address 1AEdpCfgVQh7qZ3Uru7zzztqAFSDE4VCEo divided the fund into multiple groups of 615 BTCs and distributed to several second-layer addresses. One day later, the fund was further divided into groups of 11.53 BTC and distributed to third-layer addresses (Fig. 11, dark blue represents second layer address and black represents third layer).
3.3 Onion Schema
Onion schema means that, after receiving large transaction, a large proportion of the transaction will be further transferred to a second layer address, while the remaining small proportion will be distributed to several other second layer addresses, and the second layer address holding the large portion of the transaction will then further distribute the funds to third-layer addresses as described above, and so on. It is referred to as onion schema because the shape of the transaction bears resemblance to the multiple layers of an onion.
For example, on Jan. 29th 2018, after receiving 30,988 BTC, 1No28JxYvifreyR38iR4kNRXLug6bW6aWR transferred a large portion of BTC to 162wkLYBXkQb1Qv5ikgBtXCiRzosi93dVJ, and distributed the remaining 53 BTCs to 50 other different second layer addresses. Similar pattern remains for the third and fourth layer, as shown in figure 12.
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