Despite a 10 percent drop in Bitcoin price since April, a recent analysis by Santiment revealed that Bitcoin whales had acquired an impressive 57,578 BTC.
Whale accumulation has always been a topic of great interest among market analysts, as their behavior often influences price predictions. These whales, individuals or entities holding between 100 and 10,000 BTC, possess enough cryptocurrency to sway currency markets.
The current disparity between the price of Bitcoin and the gathering of BTC by large investors contradicts previous patterns observed. In the past, an increase in whale accumulation typically aligned with periods of upward market movement or occurred after market downturns.
However, instead of purchasing during an upward trend, whales have been stockpiling Bitcoin since mid-April, when the cryptocurrency reached its highest value of the year.
Crypto analytics platform Glassnode noted that this trend starkly contrasts owners of non-exchange BTC of all other sizes, except for one category, which has been selling their Bitcoin holdings during the same period.
“An interesting dichotomy across the Bitcoin Accumulation Trend Score persists, as the largest of Whales (>10,000 BTC) continue to aggressively accumulate, whilst all other major cohorts experience heavy distribution,” Glassnode wrote on Twitter.
An interesting dichotomy across the #Bitcoin Accumulation Trend Score persists, as the largest of Whales (>10K BTC) continue to aggressively accumulate, whilst all other major cohorts experience heavy distribution. pic.twitter.com/1EMjz6yRHJ
— glassnode (@glassnode) June 3, 2023
The analytics firm also said that exchange inflows of major assets are currently at a steady level of $1.84 billion, nearing the lowest point of the cycle. This figure suggests reduced trading activity on exchanges.
BitInfoCharts data further reveal that four Bitcoin wallets possess 2.81 percent of the total circulating supply in June 2023, while the top 100 wallets collectively hold over 15 percent of all Bitcoin.
Over the past three years, the total of Bitcoin held on Binance and Bitfinex — among the leading cryptocurrency exchanges — has significantly increased, according to Glassnode’s data. Binance witnessed a rise of 421,000 BTC, while Bitfinex experienced an increase of 250,000 BTC. However, Coinbase’s holdings decreased by 558,000 BTC.
Crypto news platform BeInCrypto suggests that if the rate of whale accumulation continues to rise, it will likely affect BTC demand, potentially driving the price upward.
As of now, Binance holds a total of 703,000 Bitcoin, while Coinbase possesses 462,000 and Bitfinex 320,000.
When assessing the total amount of #Bitcoin held on the Top 3 Exchanges across the past 3 years, we note large growth across Binance and Bitfinex with an increase of +421K and +250K BTC respectively, whilst Coinbase has declined by -558K BTC.
🟡 Binance: 703K BTC (+421K BTC)
— glassnode (@glassnode) June 4, 2023
Bitcoin’s dominance reaches new heights
Apart from whale accumulation, the recent surge in Bitcoin dominance underscores its status as a safe haven for investors during times of market volatility.
Per TradingView, Bitcoin dominance currently stands at over 49 percent, marking its highest level since April 2021. This means that almost half of the total cryptocurrency market value is held in the form of BTC.
One contributing factor to this surge is the simultaneous decline in the prices of major altcoins. Tokens like Solana and Polygon’s MATIC experienced over a 20 percent drop in a Saturday morning crash. At the same time, Bitcoin’s price remained relatively stable, offering investors a refuge from more substantial losses.
Famous on-chain analyst Willy Woo has shared a prediction regarding Bitcoin’s future with his one million Twitter followers. Woo said that Bitcoin’s cost-basis analysis indicates a potential surge in value for the leading cryptocurrency in June.
Cost basis refers to the price investors pay to acquire an asset like Bitcoin. While the summer months are known for being flat or bearish, the analyst pointed out that every June within the re-accumulation phase had been bullish.
“There’s a window for BTC to rip in June. My educated guess would be a week away from the opportunity to open. Let’s see,” he said.
At the time of writing, the price of Bitcoin stands at $25,776.
Exchange Inflows across Major Assets remains near cycle lows, hovering at an extremely quiet $1.84B.
This is -$10.36B (-85%) lower than the peak inflow experienced across the May 2021 sell off, largely driven by capitulation and exit liquidity events. pic.twitter.com/q2DKFIl5LI
— glassnode (@glassnode) June 4, 2023
How whales influence the crypto market
With their high-profile wallets and vast cryptocurrency holdings, Whales have long been a topic of concern in the crypto space.
Their concentration of wealth, particularly when it remains stagnant in an account, can pose challenges to the overall ecosystem. One significant issue is the reduced liquidity when coins are held idle instead of utilized, leading to a scarcity of available coins.
The effect of whales on price volatility is another concern. When a whale conducts a large-scale transaction, it can trigger fluctuations in the market. Observing these transactions, other market participants become cautious, monitoring for signs that the whale is “dumping” their holdings.
Crypto investors often monitor the exchange inflow mean, representing the average quantity of a specific cryptocurrency deposited into exchanges. If this mean amount surpasses 2.0 and correlates with numerous whales using the exchange, whales may soon initiate a selling spree.
However, not all movements of large cryptocurrency holdings indicate a whale selling off their assets. Whales may transfer their holdings between wallets or exchanges, or they could be making substantial purchases. Sometimes, whales may choose to sell their assets gradually in smaller amounts over an extended period to avoid drawing excessive attention.
These actions can have a significant effect on the market, causing unexpected price distortions. This is why investors closely monitor known whale addresses, analyzing the number and value of associated transactions.
🐳 As #altcoin madness has ensued, there quietly is a #bullish divergence between #Bitcoin's accumulating whales and falling price. With whale holdings moving up by ~1K $BTC per day while prices fall, there is reason to believe a strong rebound can occur. https://t.co/Ol0cK5VhPE pic.twitter.com/FeHPqqJx7o
— Santiment (@santimentfeed) June 11, 2023
Crypto market downturn
The ongoing legal battle between Binance and Coinbase against the U.S. Securities and Exchange Commission (SEC) has also resulted in widespread losses for various digital assets.
The SEC has accused Binance and Coinbase of offering securities intermediation services without proper registration, leading to concerns about regulatory compliance in the industry.
In early June, the SEC expanded its list of classified securities to include around 67 cryptocurrencies. Chair Gary Gensler argued that anything other than Bitcoin should be considered a security because the public expects to make profits from these cryptocurrencies.
As a result of the SEC’s actions, cryptocurrency prices have taken a hit, with Bitcoin experiencing a 5.5 percent decline last week, reaching its lowest level since March.
However, Gensler’s actions have faced criticism from lawmakers and experts who accuse him of overstepping his authority and undermining congressional oversight. Some lawmakers maintain that his actions impede efforts to establish a regulatory framework for the digital asset industry.
Industry representatives see these enforcement actions as part of a broader “war against crypto” by the U.S. government. They are now urging Congress to pass new legislation that provides clear guidelines for regulating cryptocurrencies.
Former assistant U.S. attorney Katherine Dowling has called for immediate action, advocating for a crypto market structure bill that balances consumer protection and industry growth.