Bitcoin’s realm has experienced some pretty momentous moves lately. Data shows that the total amount of BTC held by our oceanic friends has dropped to its lowest level since 2019.
This decline marks a six-year low in whale holdings, and it has our investors and analysts scratching their heads and trying to figure out what is behind this trend—are whales not valuing Bitcoin as much as they used to? Meanwhile, our miners appear to be doing the exact opposite of our marine brethren. They have not recorded any selling activity of late. In fact, the last time they seemed to sell off any Bitcoin was on February 28.
Banks have historically played a pivotal role in influencing the markets, often seen as major drivers behind price fluctuations. They typically buy and sell large amounts of securities, affecting their prices due to their massive market influence. Whales—large holders of Bitcoin—are today playing a similar role in the Bitcoin market.
In the biggest shift since 2017, those who hold the most Bitcoin have dumped it in recent months. As of March 2023, the amount of BTC held by the top 100 addresses has fallen sharply, with those addresses now holding less than 16% of the total supply of Bitcoin. That’s the lowest level of whale dominance we’ve seen since 2019.
Miners are pursuing a very different path. Recent data show that they are accumulating their BTC rather than parting with it. This holding-back behavior has been emerging since February 28, 2023, and has been quite pronounced. It signals, in part, that miners are pretty confident in the long-term value of BTC. This could also indicate that there are some not-so-great expectations about future market conditions for BTC, and this is a strategic move to not totally drown oneself in the BTC that has been mined.
Although the total quantity of Bitcoin held by whales has diminished, an interesting new phenomenon has popped up in the market. For the last two weeks, our largest investors—whales, in common parlance—have been on an accumulation spree, buying over 30,000 BTC in total. So what gives? It seems that these larger players see the current price levels of Bitcoin as an opportunity to stock up, perhaps in expectation of better prices in the not-too-distant future.
The increasing request from whales for Bitcoin is a huge contradiction with the current trend of having fewer and fewer whale holdings. Thales says this is “in stark contrast to the overall trend of declining whale holdings.”
“These investors appear to be moving more cautiously and selectively,” Thales goes on to note. But why? The author of the video report poses two important questions.
“Are whales simply rebalancing their portfolios, or is there a larger, underlying shift occurring within the market?”
Indeed, it isn’t clear what the rebalancing act means for Bitcoin’s price. But we do know that the whales who are rebalancing aren’t selling off their Bitcoin.
A significant feature of the contemporary Bitcoin market is the transfer of capital to and from Bitcoin-backed exchange-traded funds (ETFs). Data from SoSoValue shows that the Bitcoin spot ETF had a net outflow of $409 million on March 7. This capital moving out of the ETFs had been happening for at least five days preceding that date, making for a period of five consecutive days of outflows. Meanwhile, the sentiment around Bitcoin is still murky.
Yet, the VanEck Bitcoin ETF, known for its HODL strategy, received a net inflow of $619,600 on March 7. This sheds light on the fact that even though the overall movement appears to be one of outflows, there are some funds, like the VanEck ETF, which are still managing to gather inflows, presumably because the investors behind those purchases are still quite interested in Bitcoin and are choosing vehicles that allow them a way to hold it with a strategy that is more “set it and forget it” than trading.
These outflows from Bitcoin ETFs could be a reflection of something far more serious—broader market concerns or even a change in investor sentiment. With Bitcoin’s price volatility and regulatory murkiness, it’s possible that investors are simply pulling out of the ETFs to either wait for a clearer direction in the market or pursue other investment opportunities. The fact that some Bitcoin ETFs are still seeing inflows, however, indicates that the cryptocurrency is still a much-sought-after asset—one that long-term holders expect to continue appreciating.
One of the more interesting trends to occur in recent weeks has been the behavior of Bitcoin miners. Historically, miners have sold off a substantial portion of the Bitcoin they mine to pay for the and to generate revenue. However, data suggest that since the miners have not sold any of their Bitcoin, choosing instead to hold onto it.
This decision might be influenced by several aspects, such as a conviction in Bitcoin’s upward price movement or an anticipation of even more institutional interest. It is sometimes said that miners are a kind of bellwether for the long-term viability of Bitcoin, since they are directly affected by the cost of mining and by the kind of profit they make. So we can take their decision to hoard Bitcoin rather than sell it as a pretty clear signal that they expect its future value to be much higher than its current price.
Collectively, the data on whale holdings, miner behavior, and Bitcoin ETF flows presents a snapshot of a transitioning market. Whale holdings are at a six-year low, but that’s not to say large investors aren’t still amassing Bitcoin. They are, and the data suggests this is still a setting of accumulation—large investors are clearly quite bullish on the asset’s long-term potential.
Even though there have been recent outflows from Bitcoin ETFs, some products still manage to attract investors. This signals that Bitcoin’s appeal endures in some areas of the market. So what does it mean when certain Bitcoin investment products have seen outflows, even as the flagship cryptocurrency has remained relatively stable in price? It likely means that strategic, long-term players are the ones accumulating Bitcoin, while speculative, short-term traders are the ones driving the price up and down. And as always, the broader market will be watching to see what these dynamics add up to in the weeks and months ahead.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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