Bitcoin whales (BTC) have been buying more since Christmas, data from the chain shows. This suggests that wealthy investors are continuing to gobble up the supply of BTC.
It is nearly impossible to separate institutional investors from individual investors with on-chain data. However, the trend shows that despite its rally, investors with large capital are increasingly entering the Bitcoin market.
Bitcoin major suppliers. Source: Santiment
Why do whales keep buying bitcoin?
According to analysts at Santiment, around $ 647 million worth of bitcoin has likely moved from small addresses to large addresses.
Addresses greater than 1,000 BTC or more are viewed as whales by many analysts as 1,000 BTC equals more than $ 27 million at the current price of $ 27,100. The analysts wrote:
“In the last 48 hours since Christmas, # Bitcoin addresses with $ 1,000 or more BTC now have 0.13% more of what is on offer than smaller addresses before. That’s roughly 24,158 tokens, which is $ 647.7 million at the time of this writing. “
Bitcoin has nearly tripled since mid-2020, and the upward trend for BTC is likely to be limited in the near future.
However, most of the data points in the chain show that fewer whales are being sold through large exchanges. Ki Young Ju, CEO at CryptoQuant said:
“BTC whales appear to be exhausted to sell. Fewer whales deposit on exchanges. I think this uptrend will continue as institutional investors keep buying and the exchange whale ratio stays below 85%. “Bitcoin Exchange Whale Ratio. Source: CryptoQuant
There are two main reasons whales might pile up Bitcoin in the current price range.
First, despite Bitcoin’s exaggerated rally, whales may believe that the psychological barrier will break at $ 30,000. If so, option data suggests that $ 36,000 could be a likely target in the short term.
Second, there is no solid reason to expect a major correction other than the CME gap and the high rate of funding for the futures market.
However, if Bitcoin consolidated after each rally, as seen for the past two days, the funding rate would likely normalize. In this case the derivatives market would be less overheated, increasing the likelihood of a new rally.
A pseudonymous trader called “Byzantine General” said the market is currently giving mixed signals. Both long and short contract holders are aggressive, which allows for both a long and a short squeeze. He said:
“Such contradicting signals. Both longs and shorts are overly aggressive lol. I should probably sit on my hands. “
The likely short-term scenario is greater consolidation
As a rule, the price of Bitcoin on Coinbase is higher than that of Binance and other Tether-dependent exchanges. However, for the past week, Bitcoin has been trading a little lower on Coinbase, by around $ 20-30.
While the gap is small, it shows that the US, which drove the Bitcoin rally in December, may see declining buyer demand. However, the Asian market and the derivatives market are seeing an increase in buyer demand.
Given that bitcoin demand appears to be cooling off in the U.S. spot market, bitcoin could consolidate longer with lower volatility.