4.12 Million Whales Hold Bitcoin Worldwide
Despite a 5% drop in the value of Bitcoin which occurred during the course of the night (Central European Time) resulting in the value of Bitcoin hovering at around $34,000 this morning, an interesting interest in the number of ‘whales’ has come about.
A ‘whale’ is an address that holds more than 1,000 Bitcoins, and whale-orientated Bitcoin accumulation is often led by highly analytical enthusiasts.
Given the huge vested interest in ensuring the value of their cryptocurrency stock remains high, any increase in the amount of whales is generally considered to be a signal of market optimism, and today’s interesting statistic is that the number of whales worldwide has risen by a remarkable 80,000 to just over 4.12 million, which is not far off the all-time high which occurred in February, when Bitcoin was at its stratospheric value of over $60,000.
Just two weeks ago, it became clear that whales were beginning to show an interest in accumulating more Bitcoin than they already had, and this dynamic has continued until a spike was noticed yesterday, representing the biggest daily accumulation spree of this year, with 60,000 bitcoins having been purchased.
This caused the value of Bitcoin to increase by approximately 5% during the weekend.
Santiment, which is an on-chain analysis company which often concentrates on Bitcoin accumulation statistics by whales, stated that “Bitcoin whale addresses holding between 100 to 10,000 Bitcoin kicked off July with a 60,000 Bitcoin accumulation spike. These addresses now hold 9.12 million coins combined after holding 100,000 less Bitcoins just six weeks ago.”
Some observers are speculating that the aggressive buying of Bitcoin by whales could signal a point at which a low value has now been reached, and the whales could be making hay whilst the sun shines in order to maximize gains if the price now goes up.
Another important factor to consider is that the hash rate has been declining, and has been recently at its lowest point in 19 months at 87.6 terrahashes per second, demonstrating that mining has become less difficult.
This is an interesting situation, especially given the dumping by many Chinese Bitcoin mining entities of huge supercomputers recently, following the bans by the Chinese government which have been carried out across various parts of China, causing some entities to move their mining operations outside China, and others to abandon mining altogether.
In the past, mining difficulty and cost of electricity had been two aspects that had helped maintain high demand and high prices of Bitcoin, and since its launch over a decade ago, Bitcoin’s mining opportunities have been dwindling due to high electricity consumption and the potential low reward for mining small amounts of currency compared to the high cost of power.
In China, many large, industrial scale mining rigs were benefiting from free electricity, something that has long been a bete noir of the Chinese government.
In 2019, the People’s Bank of China, which is the state owned, communist-aligned central bank, devised a plan to put a stop to some operations including investigating the power consumption of Bitcoin miners to determine whether their enormous use of electricity was having an effect on overall power prices in specific areas of China.
Given that China had this electricity vs production power advantage, and that China had been home to over 70% of all mining pools globally as of 2017, the government’s banning of cryptocurrency mining which has been in progress for the past few weeks has changed the landscape.
Therefore, whilst a declining hashrate and the less difficult mining possibilities are there, prices are holding steady due to demand increasing as liquidity declines.
Given the ever changing nature of Bitcoin, whether it be at the hands of Elon Musk’s disruptive tweets, or the purges on mining in the Far East, whale activity is often a well-considered marker of confidence.