Are Bitcoin Whales Buying The Dip?

The recent volatility in Bitcoin prices has led many to wonder if large-scale bitcoin holders are taking advantage of price declines to accumulate more bitcoins. While some metrics may initially suggest bullish long-term holdings, closer examination reveals a more nuanced story, especially after the current extended period of choppy consolidation.

Do long-term holders accumulate?

On initial observation, long-term Bitcoin holders appear to be increasing their holdings. According to Long Term Holder Supply, as of July 30, the amount of BTC held by long-term holders increased from 14.86 million to 15.36 million BTC. This increase of around 500,000 BTC has led some to believe that long-term holders are aggressively buying the dip, potentially setting the stage for the next significant price increase.

Figure 1: The long-term supply of BTC holders increased by 500,000 as the price of bitcoin fell and recovered. Go to live chart 🔍

However, this interpretation could be misleading. Long-term holders are defined as wallets that have held BTC for 155 days or more. This week we just passed 155 days from the most recent all-time high. Therefore, it is likely that many short-term holders during that period simply moved into the long-term category without any new accumulation occurring. These investors are now holding onto their BTC, hoping for higher prices. So, in isolation, this chart does not necessarily indicate new buying activity from established market participants.

Days of Destroyed Coins: A Contradictory Indicator

To further explore the behavior of long-term holders, we can examine the supply-adjusted Destroyed Coin Days value over the recent 155-day period. This metric measures the speed at which coins move, giving more weight to coins that have been held for long periods of time. An increase in this value could indicate that long-term holders who hold a substantial amount of bitcoin are moving their coins, possibly indicating more selling than accumulation.

Figure 2: Supply-adjusted CDD (90 dma) at levels typically reached at bull cycle tops. Go to live chart 🔍

Recently, we have seen a significant increase in this data, suggesting that long-term holders may be distributing rather than hoarding BTC. However, this increase is mainly skewed by a single massive transaction of around 140,000 BTC from a Mt wallet. Gox known on May 28, 2024. When we exclude this outlier, the data looks much more typical for this stage of the comparable market cycle. to the periods of late 2016 and early 2017 or mid-2019 to early 2020.

Figure 3: Mt Refund Wallet Movement. Gox distorted the CDD data. Current profit taking is at typical levels. Go to live chart 🔍

Behavior of whale wallets

To determine whether whales are buying or selling bitcoin, analyzing wallets that hold substantial amounts of coins is crucial. Reviewing wallets with at least 10 BTC (minimum of ~$600,000 at current prices), we can evaluate the actions of significant market participants.

Since Bitcoin’s peak earlier this year, the number of wallets holding at least 10 BTC has increased slightly. Similarly, the number of wallets holding 100 BTC or more has also seen modest growth. Given the minimum threshold to be included in these charts, the amount of bitcoins accumulated by wallets holding between 10 and 999 BTC could represent tens of thousands of coins bought since the most recent all-time high.

Figure 4: Over 10 BTC wallets have seen growth in recent weeks after a substantial decline in the run-up to a new ATH. Go to live chart 🔍

However, the trend reverses when we look at larger wallets that hold 1,000 BTC or more. The number of these large wallets has decreased slightly, indicating that some major holders may be distributing their BTC. The most notable change is in wallets holding 10,000 BTC or more, which dropped from 109 to 104 in recent months. This suggests that some of the largest bitcoin holders are likely to profit or redistribute their holdings to smaller wallets. However, given that most of these extremely large wallets will usually be exchanges or other centralized wallets, it is more likely that they are a collection of coins by traders and investors, as opposed to any individual or group.

Figure 5: Over 10,000 BTC wallets have been steadily declining since the lows of the bear cycle and have not seen sustained buying since. Go to live chart 🔍

The role of ETFs and institutional inflows

Since peaking at $60.8 billion in assets under management (AUM) on March 14, BTC ETFs have seen their AUM decline by about $6 billion, however, taking into account the fall in bitcoin’s price from our all-time high, this approx. equates to an increase of about 85,000 BTC. While this is positive, the increase only negated the amount of newly mined Bitcoin in the same period, also 85,000 BTC. ETFs have helped reduce selling pressure from miners and potentially large holders, but have not accumulated enough to have a positive impact on price.

Figure 6: BTC ETFs have increased their bitcoin holdings just enough to cancel out the newly minted bitcoin from our all-time high.

Retail interest on the rise

Interestingly, while large holders seem to be selling BTC, there has been a significant increase in smaller wallets – those holding between 0.01 and 10 BTC. These smaller wallets added tens of thousands of BTC, showing increased interest from retail investors. There was a net shift of about 60,000 bitcoins from 10+ BTC wallets to less than 10 BTC. This may sound alarming, but given that we typically see millions of bitcoins move from large, long-term holders to new market entrants throughout the bull cycle, this is currently not a cause for concern.

Figure 7: Wallets between 0.01 BTC and 10 BTC have accumulated all the higher wallet sales, about 60,000 BTC. Go to live chart 🔍

Conclusion

The narrative that whales have been accumulating bitcoin on dips and throughout this period of consolidation does not appear to be the case. While the supply metrics for long-term holders appear initially bullish, they largely reflect the transition of short-term holders into the long-term category rather than new accumulation.

Growing retail holdings and the stabilizing influence of ETFs could provide a solid foundation for future price appreciation, especially if we see renewed institutional interest and continued retail flows post-halving, but currently contribute little to any Bitcoin price appreciation .

The real question is whether the current distribution phase is reaching and setting the stage for a new round of accumulation that could propel Bitcoin to new highs in the coming months, or whether this flow of old coins to newer entrants continues and likely suppresses the potential upside. for the rest of our bull cycle.

🎥 For a more in-depth look at this topic, check out our recent YouTube video here: Are Bitcoin Whales Still Buying?

And don’t forget to check out our latest YouTube video here discussing how we can improve one of the best bitcoin values: