In the last few weeks, the number of Bitcoin addresses (BTC) with more than 1,000 BTC – often referred to as “whales” – rose quickly to around 2088. The trend started shortly after Bitcoin prices fell to $ 3,600 in March.
The data is relevant as historical data suggests that a violent buildup by major investors is usually a sign of a new rally.
Over the past six years, Bitcoin has seen periods of inverse correlation between whale accumulation phases and the price of BTC. The fewer the number of addresses that contain large amounts of BTC, the lower the price of BTC.
Positive data in the chain inspires optimism about Bitcoin
Whales tend to follow the regions with the highest liquidity as they handle large amounts of Bitcoin. When whales believe that the price of BTC has peaked, they sell quickly, causing the number of big headlines carrying BTC to drop.
In early 2018, after the price of Bitcoin hit $ 20,000, the number of Bitcoin addresses has dropped by 1,000 BTC ($ 11 million) since 2014 to an invisible level.
Another metric in the chain, not limited to whales, shows that investors are generally amassing more Bitcoin than before. Glassnode noted that stocks that have never issued BTC but have been active for the past seven years have increased significantly since 2018. The researchers write:
“There are over 500,000 # Bitcoin accumulation addresses” with a total of 2.6 million BTC backlog addresses (approx. 14%): You have made more than 2 incoming [transactions], have never issued BTC and have been to the last seven Years active (represent lost coins), exchanges and miners are excluded.
While the two data points are recognized as bullish trends, it’s also important to note that they have been increasing steadily over the past decade.
It’s difficult to determine if this data is good for the Bitcoin price cycle in the short term. However, this suggests a long-term healthy growth trend for Bitcoin.
The basics complement the strong data in the chain. So what’s the next step?
In addition to the data indicating the stage of Bitcoin accumulation, several fundamental factors indicate stability in various industries.
The Bitcoin blockchain hash rate reached constant record highs despite May 11th in half. This indicates that the BTC price is high enough for miners to remain profitable.
Trading activity on the largest regulated exchanges and futures markets such as the Chicago Mercantile Exchange also remains high. However, BTC reserves on the exchanges have plummeted compared to previous bulls.
The trend towards higher trading activity and lower BTC reserves shows that investors are more likely to buy than sell BTC on exchanges. Raphael Schultz Kraft, Chief Technology Officer at Glassnode, said:
“Exchange rate change since the beginning of the year: BTC: -9.6%, ETH: + 10.4%.”
Since most retail investors use spot cryptocurrency exchanges, while institutions use structured investment vehicles, and some whales use over-the-counter exchanges, the data suggests that both private and whale exchanges appear to be accumulating Bitcoin.