- The move from whale ownership to exchanges reflected selling pressure.
- Whale numbers have skyrocketed since the interest from TradFi giants.
Bitcoin [BTC] fluctuated in a tight trading range since last month’s market rally, dashing the broader market’s hopes of an extended bull run.
Read Bitcoin [BTC] Price Forecast 2023-24
After hitting annual highs of $31,000 in June, momentum has leveled off with the king coin hovering between $29,000 and $31,000, data from CoinMarketCap marked.
In such cases, it becomes useful to track the behavior of addresses containing large amounts of Bitcoins, popularly referred to as “whales” in crypto circles. Most organizations that track on-chain activity define whales as wallets that can store more than 1000 coins at any given time.
These influential investors, by controlling a large portion of the circulating supply of BTC, contribute significantly to price volatility through their transactional activity. Whale movements have become the subject of intensive analysis over the years, helping traders and analysts recognize periods of bull and bear markets.
Whales prepare to dump?
Recently one analyst from prominent blockchain analytics firm CryptoQuant drew attention to intriguing whale behavior that could impact the market in the coming days.
The analyst tracked the 72-hour Exchange Whale Ratio for BTC and found that the stat has been steadily climbing over the past week, something he called an “unmistakable sign” of selling pressure.
Source: TradingView
Exchange Whale Ratio is actually the relative size of the top 10 inflow transactions compared to the total inflow on an exchange. When whales begin to transfer coins to exchanges in large quantities, it introduces an oversupply to the market and is generally seen as a sell signal.
The Exchange Whale Ratio remains below 85% in a rising market, while when bears are dominant, this indicator rises above 85%. In the above example, the ratio has been moving in the 85%-90% range for almost a week now, a giveaway that price drops may be just around the corner.
While selling pressure was high, the analyst stated that if sellers were quickly depleted, it could pave the way for a new wave of demand, culminating in higher prices for BTC.
Institutional interest attracts the attention of whales
The interest of TradFi giants in Bitcoin’s potential has undoubtedly piqued the interest of whale investors. Since announcing BlackRock’s application for a spot Bitcoin ETF, whale transactions worth more than $1 million have risen significantly, according to data from Santiment.
During last month’s rally, the number of transactions rose to its yearly high of 2983. As the price of BTC rose, the move could be interpreted as whale buying pressure. However, spikes in the number of transactions in July led to a drop in prices, pointing to selling pressure.
Source: Sentiment
As investors increased their holdings, the total number of whale addresses, i.e. wallets holding more than 1k BTC coins, skyrocketed. The number of whales reached 1,686 on July 7, the highest since the November 2222 implosion of FTX. But the number has dropped due to the latest wave of sell-offs.
At the time of writing, there were about 1,678 whales on the market, according to Glassnode – more than 2% more than last month.
Source: Glassnode
Dormant addresses come back to life
Bitcoin whales are starting to make big strides lately. An address, which has been inactive for the past 11 years, woke up from sleep to transfer about $31 million in BTC to another wallet, according to Lookonchain.
A BTC whale that has been dormant for 11 years has all 1,037.42 $BTC($37.8 million) to a new address “bc1qtl” an hour ago.
The whale received 1,037.42 $BTC($5,107 at the time) on April 11, 2012, when the price was $4.92.https://t.co/k8ZmO5vc8X pic.twitter.com/xBaw2dQfY8
— Lookonchain (@lookonchain) July 22, 2023
However, it should be noted that movement alone is not enough to conclude that a whale made money. In many cases, whales transfer money from one wallet to another, or from one exchange to another. In this case, it was unclear at the time of writing.
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Opportunity for potential buyers?
With the important halving event less than a year from now and indications of greater institutional interest, more investors are drawn to BTC’s bullish possibilities and are looking for opportunities to grab the king coin.
However, as the amount of BTC available for purchase has fallen to an all-time low, these would-be buyers will be interested in selling whales.
Source: Glassnode