Data on the chain shows that since Christmas, the purchase of Bitcoin (BTC) whales has increased. This shows that high-net-worth investors are continuing to buy new supplies of Bitcoin.
It is almost impossible to distinguish institutional investors from individual investors through on-chain data. However, this trend shows that despite the rise in Bitcoin prices, investors with large amounts of capital are increasingly entering the Bitcoin market.
Why do whales continue to buy more bitcoins?
According to Santiment analysts, approximately $647 million in Bitcoin may be transferred from a small address to a large address.
Addresses holding more than 1,000 bitcoins or more are regarded by many analysts as whales, because at the current price of $27,100, 1,000 bitcoins are equivalent to more than $27 million. The analyst wrote:
“In the past 48 hours since Christmas, addresses with 1,000 or more Bitcoins now have 0.13% more supply than smaller addresses before. This is approximately 24,158 Bitcoins. At the time of writing this article, This is equivalent to $647.7 million.”
Since mid-2020, Bitcoin has risen nearly three times. It can be said that in the near future, Bitcoin’s upside space is limited.
Despite this, most on-chain data shows that fewer whales are sold on major exchanges. CryptoQuant CEO Ki Young Ju said:
“Bitcoin whales seem to be struggling to sell. Fewer whales deposit Bitcoin on exchanges. I think this bull market will continue as institutional investors continue to buy and the exchange whale ratio remains below 85%.”
There are two main reasons why whales may hoard Bitcoin in the current price range.
First of all, despite Bitcoin’s excessive gains, the whale may think that the psychological barrier of $30,000 will be broken. If so, option data suggests that $36,000 may be a short-term goal.
Secondly, apart from the CME gap and the high funding rate in the futures market, there is no good reason to expect a major adjustment.
But if Bitcoin consolidates after each rally, as it did in the past two days, then funding rates may normalize. When this happens, the degree of overheating of the derivatives market will be reduced, thereby increasing the possibility of a new round of rise.
An anonymous trader named “Byzantine General” said that the market is currently sending conflicting signals. Holders of long and short contracts are aggressive, which makes it possible for both longs and shorts to be squeezed. He said:
“This kind of contradictory signal. Both the bulls and the bears are too aggressive. Maybe I should stand by.”
In the near future, there may be more consolidation
Generally, the price of Bitcoin on Coinbase is higher than Binance and some other exchanges. However, in the past week, the trading price of Bitcoin on Coinbase has dropped slightly, around $20-30.
Although the price difference is small, it suggests that demand from US buyers who have driven Bitcoin’s rise throughout December may be slowing. But the demand from buyers in Asian markets and derivatives markets is increasing.
Considering that the demand for Bitcoin in the US spot market seems to be cooling down, Bitcoin may consolidate for a longer period of time with lower volatility.
