According to crypto analytics platform Santiment, large cryptocurrency holders, colloquially known as “whales,” are opting to retain significant amounts of a particular crypto asset class during the ongoing market correction.
While many might expect these major players to cash out entirely, Santiment reveals that they instead park their wealth in stablecoins — a digital asset pegged to the value of a specific currency or commodity, such as the U.S. dollar.
TechCrunch recently conducted an in-depth analysis of the wallets belonging to six influential crypto whales, referring to wallets holding between $100,000 and $10 million worth of crypto assets.
Through on-chain portfolio data sourced from Nansen, TechCrunch explored where these whales choose to allocate their funds and how their actions serve as crucial indicators of market trends.
According to Nansen’s data, the combined value of six leading crypto whales’ wallets reaches $493.6 million. Almost 98 percent of these whales’ assets are held on the Ethereum blockchain, highlighting the network’s dominance in the cryptocurrency space.
Ethereum emerged as the primary choice for these whales, with wrapped ether, staked ether and ether itself accounting for a significant portion of their allocations. In fact, Ethereum-related assets made up 69 percent of the total value held in the six wallets. Following closely behind was wrapped bitcoin, which constituted 7.66 percent of the overall allocation.
The majority of these whales exhibited a risk-off strategy by opting for liquid staking tokens, stablecoins and wrapped bitcoin and ether. This conservative mindset is evident in their portfolio composition, where holdings reflect a preference for assets with more stable value or those tied to major cryptocurrencies.
Among the wallets examined, only two crypto wallets displayed a significant amount held in stablecoins, accounting for 22 percent and 12.87 percent, respectively. This indicates that these whales possess a robust appetite for market participation and are actively investing, albeit with a preference for staking rather than observing from the sidelines with their funds in a supposedly stable manner.
Whales and sharks stablecoin accumulation
Santiment’s analysis supports these findings, where it also examines the actions of whales and sharks (500 to 1000 BTC) in the crypto market. According to the platform’s data, these entities have been accumulating substantial quantities of stablecoins, including Tether (USDT), U.S. Dollar Coin (USDC) and Dai (DAI).
“Sharks and whales holding Tether (in red) are up above 40 percent of the supply held again, their largest amount since November, 2021,” said the analytics firm.
“Sharks and whales holding USD Coin (in blue) hold above 37 percent of the supply held again, their largest amount since February, 2023. Sharks and whales holding Dai (in yellow) are just under 40 percent of the supply held again, their largest amount since December, 2020.”
These statistics highlight the extent to which large crypto holders have chosen not to liquidate their assets entirely but rather to store them in stablecoins, biding their time for a favorable re-entry into the market.
Although the market capitalization of certain leading stablecoins peaked in March 2022, Santiment explains that a decrease in the market cap may indicate that prominent addresses have amassed substantial profits and are no longer supporting the market as they did during the previous bull run.
The accumulation of stablecoins has been consistent, with no sudden major movements detected in whale transactions. However, if such movements were to occur, it could indicate that the market has reached its bottom.
Although USD Coin experienced some significant movements at the end of May, Santiment maintains that the stagnant stablecoins are not experiencing the same explosive activity as seen in mid-March, which subsequently sparked a bull rally.
In May, the total market capitalization of stablecoins in cryptocurrency hit its lowest level since September 2021, marking the fourth consecutive month of decline. It dropped by 0.45 percent to $130 billion as of May 23, as reported by CryptoGlobe.
According to CCData’s recent report on Stablecoins & CBDCs, stablecoin trading volumes plummeted 40.6 percent to 460 billion this month, representing the lowest monthly trading volume since December 2022. As of May 22, the report reveals that only $292 billion had been traded, with volumes predicted to decline even further.
Promising gains on altcoins
Following the recent regulatory actions by the SEC against leading exchanges, the cryptocurrency market has faced significant challenges. Traders and investors responded by either migrating to alternative exchanges or withdrawing their digital assets entirely, resulting in a five percent crash in the global crypto market on Monday.
However, while the crypto market continues to experience turbulence, crypto whales have strategically focused on a select few altcoins showing potential for gains.
Large institutional investors have recognized the opportunity presented by the industry-wide contraction and have started to bet against the negative sentiment prevailing in the broader crypto industry. They see the recent market contraction as an opportunity to buy the dip, and several altcoins have emerged as the top choices attracting investor attention.
Ripple (XRP) recently made its way into the list of the top-performing altcoins, experiencing a 17 percent price surge before the industry-wide retracement on Monday. Crypto whales have been reaffirming their confidence in XRP, as evidenced by their increased holdings.
XRP whales holding one million to 10 million coins have doubled down on their bullish stance, adding 100 million coins valued at nearly $53 million between May 30 and June 6.
In addition, Crypto whales have taken notice of LidoDAO and have been increasing their positions in its native LDO token. The number of large transactions involving LDO has more than doubled since the end of May, indicating growing interest from whales seeking passive income opportunities.
Another altcoin, Optimism (OP), has also caught the attention of strategic whale investors in recent weeks. Crypto whales holding balances of 100,000 to 10 million OP have added 100 million tokens to their holdings between May 30 and June 7.