The recent volatility in Bitcoin prices has led many to wonder whether large-scale holders are taking advantage of the price decline to accumulate more Bitcoin. While some metrics may initially point to an increase in long-term holdings, closer examination reveals a more nuanced story, especially after the current prolonged period of volatile consolidation.
Do long term holders accumulate stocks?
Upon initial observation, it appears that long-term Bitcoin holders are increasing their holdings. According to Long term carrier suppliesSince July 30, the amount of Bitcoin held by long-term holders has risen from 14.86 million to 15.36 million Bitcoin. This surge of around 500,000 Bitcoin has led some to believe that long-term holders are aggressively buying on the dip, potentially paving the way for the next big price rally.
However, this interpretation can be misleading. Long-term cryptocurrency holders are defined as wallets that have held Bitcoin for 155 days or more. This week, we just passed 155 days since our all-time high. Therefore, it is likely that many short-term cryptocurrency holders from that period have simply moved into the long-term category without any new accumulation taking place. These investors are now holding onto their Bitcoin, hoping for a price increase. So, in isolation, this chart does not necessarily indicate new buying activity from established market participants.
Days of Destroyed Coins: A Contrarian Indicator
To further explore the behavior of long-term shareholders, we can examine Days of Modified Coins Destroyed A measure over the last 155 days. This measure measures the speed of movement of coins, giving more weight to coins that have been held for longer periods. A higher measure would indicate that long-term holders who own a large amount of Bitcoin are moving their coins, likely indicating more selling rather than accumulation.
We have recently seen a significant increase in this data, suggesting that long-term holders of Bitcoin may be distributing rather than accumulating. However, this increase is primarily due to a single massive transaction of approximately 140,000 Bitcoin from a known Mt. Gox wallet on May 28, 2024. When we exclude this outlier, the data appears more typical for this stage of the market cycle than the periods in late 2016 and early 2017 or mid-2019 to early 2020.
whale conservation behavior
To determine whether whales are buying or selling Bitcoin, it is crucial to analyze wallets that contain large amounts of the currency. By examining wallets that contain at least 10 Bitcoins (Minimum is $600,000 at current prices.), we can measure the actions of important market participants.
Since Bitcoin peaked earlier this year, the number of Wallets containing at least 10 BTC It has increased slightly. Likewise, the number of Wallets with 100 BTC or more The cryptocurrency has also seen a modest uptick. Given the minimum threshold required to be included in these charts, the amount of bitcoin accumulated by wallets holding between 10 and 999 bitcoins could represent tens of thousands of cryptocurrencies purchased since the all-time high.
However, the trend reverses when we look at larger companies. Wallets with 1000 BTC or moreThe number of these large wallets has decreased slightly, suggesting that some major Bitcoin holders may be distributing their Bitcoin. The most noticeable change is Wallets with 10,000 BTC or moreThe number of bitcoins has dropped from 109 to 104 in recent months. This suggests that some of the largest holders of bitcoin may be taking some profits or redistributing their holdings across smaller wallets. However, since most of these large wallets will typically be exchanges or other centralized wallets, they are more likely to be a collection of traders’ and investors’ coins rather than any one individual or group.
The Role of ETFs and Institutional Flows
Since Bitcoin’s AUM peaked at $60.8 billion on March 14, Bitcoin ETFs have seen their AUM drop by about $6 billion, however, when taking into account the decline in Bitcoin’s price since its all-time high, this equates to an increase of about 85,000 Bitcoin. While this is positive, the increase only negates the amount of Bitcoin newly mined during the same period, also 85,000 Bitcoin. The ETFs have helped reduce selling pressure from miners and possibly large holders but have not accumulated significantly enough to positively impact the price.
Retail interest increases
Interestingly, while large holders appear to be selling Bitcoin, there has been a significant increase in smaller wallets – those Holds between 0.01 And 10 BTC. These smaller wallets have added tens of thousands of BTC, indicating increased interest from retail investors. There was a net change of about 60,000 BTC from 10 BTC or larger wallets to wallets smaller than 10 BTC. This may seem alarming, but given that we typically see millions of BTC shift from large, long-term holders to new market participants throughout a full bull cycle, this is not a cause for concern at this time.
conclusion
The narrative that whales were piling up Bitcoin on dips and during this period of consolidation does not appear to be true. While the supply metrics from long-term holders initially appear bullish, they largely reflect short-term holders moving into the long-term class rather than new accumulation.
The increase in retail holdings and the stabilizing influence of ETFs could provide a solid foundation for future price appreciation, especially if we see renewed institutional interest and continued retail inflows post-halving, but they currently contribute little to any Bitcoin price appreciation.
The real question is whether the current distribution phase will take advantage and set the stage for a new round of accumulation, which could push Bitcoin to new highs in the coming months, or whether this influx of old coins to new participants continues and is likely to suppress the potential upside for the rest of our bull cycle.
🎥 For a more in-depth look at this topic, check out our recent YouTube video here: Are Bitcoin Whales Still Buying?
And don’t forget to watch our latest YouTube video here, which discusses how we can improve one of Bitcoin’s best metrics:
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