Bitcoin whales did not sell, they simply bought more!
Last week, it was looking likely that Bitcoin whales may look to begin selling, as prices were considered by analysts to be at a peak.
As the price of Bitcoin ripped past the $50,000 mark, many analysts within major banks and cryptocurrency data companies took the view that prices would stabilize, and that many whales would begin to offload Bitcoin whilst its price was back to pre-Elon Musk tweet values.
The rebound to this level of value is remarkable in itself. It demonstrates that the volatility of Bitcoin is a virtue in otherwise flat traditional markets, and that its stress testing has been conducted via a few months of influencer-driven changes of value as well as the hashrate having been affected by the Chinese government’s ban on cryptocurrency mining.
By rebounding back to $50,000 despite both of these dynamics, Bitcoin’s infrastructure has proven itself to be extremely robust, yet more elastic than pretty much any other asset class, and has done so at a time during which many individuals are looking for alternative investments that represent strong long-term prospects.
Now, as the price of Bitcoin rests at around $47,300, the whales did not sell, and are actually accumulating even more Bitcoin.
In reality, on-chain analytical firms have tracked a positive growth in Bitcoin holdings for addresses which have current stock of between 1,000 and 10,000 Bitcoins, meaning that a renewed accumulation drive has taken place among the entities and individuals which currently hold the most Bitcoins.
This is very interesting, especially given that it is likely that many people within and outside of the cryptocurrency community would likely have not predicted that the price of Bitcoin would have risen back to this level so quickly, or that it would be driven by positive sentiment surrounding the US government’s advanced proposals to put in place a taxation and regulatory framework, showing that the overall mood is in favor of regulation for the sustainability of cryptocurrency.
Given that the price was so heavily influenced in the upward direction in the immediate aftermath of the planning of regulations by the US government, it is now clearer than ever that regulation is the way forward and that the cryptocurrency trading community is now understanding that the decentralized financial services ecosystem which is huge and very much the way of the future has to be regulated in order to prosper, grow and reach its potential.
With regard to large investors, the number of whales has been rapidly increasing. On July 2, 18 new whales surfaced on the chain and the total bitcoin balance held by whale entities shot up by 82,760 BTC, which amounts to approximately $3.8 billion at current prices as of August 31, 2021.
Following the 80-20 rule (also known as the Pareto principle), the top 20% of Bitcoin holders have more than 80% of bitcoin value in U.S. dollars. Therefore, by the nature of the dominant position these whales hold over the Bitcoin supply, they clearly are in the know and used to making decisions that work out correctly, hence their decision to hold onto Bitcoin when analysts predicted that they would sell is interesting indeed.