Bitcoin whales, entities holding large amounts of bitcoin, have been stirring the market again in recent days. Although these entities are almost always active, it is interesting to chart their exact buying behaviour. Because of the sheer size of their bitcoin assets and their capital strength, whales have what it takes to move the market on their own.
Whales that move bitcoin on a large scale can cause a pump or dump. At the same time, by analyzing the behaviour of whales, we see how big money thinks about bitcoin. We qualify an entity as a whale if it is a wallet with more than 1,000 bitcoin. At the time of writing, most whales are re-accumulating. Which means they are gobbling up large amounts of bitcoin from the market.
Santiment, a party that specializes in on-chain analysis, reports that whales have bought up 1.06 percent of all bitcoin as of December 23, 2021. These entities already have more than 1,000 bitcoin on their balance sheet and are thus looking for more. Over a seven-week span, this group of bitcoiners has withdrawn 220,000 bitcoin from the market. The fastest accumulation of this cohort of bitcoiners since September 2019.
Interestingly, this accumulation is taking place at a time when the price is struggling. Although we are currently enjoying a small rebound, bitcoin had to write down mostly red days in recent weeks. Especially among the retail public, this is causing enormous anxiety. Witness the Fear & Greed Index, which last week recorded a score of 20. This means that the market is in “extreme fear”.
The whales don’t seem to care and seem to benefit from the fear of the retail public. This is the embodiment of Warren Buffet’s statement: “Be greedy when others are fearful.” Just when everyone is panicking, the most seasoned investors seize their moment to get in on the cheap.
Accumulation on this scale of whales has had a major impact on the bitcoin price in the past. Buying such large amounts of bitcoin in a relatively short period of time affects the supply of bitcoin in the market. There comes a time when the selling pressure subsides and then the price skyrockets.
The last time whales accumulated bitcoin on this scale was toward the end of 2019. A year later, the bull run began of which it will become apparent in the coming weeks to months whether we are still in it. That does not mean that this accumulation should lead to another rally in the short term. Indeed, there was also almost one year between the accumulation in 2019 and the price explosion in 2020.
If we combine the market sentiment with the whales’ buying behaviour, then something nice could happen in the short term. Meanwhile, according to the Fear & Greed Index, market sentiment has rebounded to a score of 50, which puts the market in neutral territory at the moment. But bitcoin remains an unpredictable beast and especially in the short term, the price can do crazy things.