IntoTheBlock classifies as Investors all addresses that own between 0.1% to 1% of the circulating supply of a crypto-asset. These provide indication of addresses that hold a reasonably large position in this crypto.
Investors are also classified as Low Activity or High Activity to differentiate addresses that are constantly buying and selling from those that are simply holding. Addresses with over 300 transactions are considered to be high activity, while those below 300 are classified as low activity.
Similar to the Whales indicator, Investors give an approximation of the level of concentration of a crypto-asset’s supply. High concentration in few addresses can be a risk because of the following two reasons:
1) High supply concentration points to low decentralization. This is the case as if one person held 99% of the supply it would not be considered a decentralized ledger after all. If these addresses hold a large enough portion they could act maliciously to the expense of small holders.
2) A large amount of whales (especially high activity whales) points to few players moving the market. Therefore, this suggests that whales could potentially sell and crash the crypto-asset’s price.
Disclaimer. The whales indicator and other ownership indicators do not differentiate regular addresses from exchanges and smart contract addresses. Hence, the indicator provides an approximation of the concentration of ownership but not a fully-detailed one. IntoTheBlock is working on better classifying whales and smart contract addresses.