Recent volatility in the price of Bitcoin has many wondering whether large Bitcoin holders are taking advantage of the price decline to accumulate more Bitcoin. While some indicators may initially point to a rise in long-term savings, a closer look reveals a more nuanced story, especially after the current long period of unstable consolidation.
Are long term holders accumulating?
On initial observation, long-term Bitcoin holders appear to be increasing their holdings. According to Long Term Holder Supply, the amount of BTC held by long-term holders has increased from 14.86 million to 15.36 million BTC since July 30. This spike of about 500,000 BTC has led some to believe that long-term holders are aggressively buying the dip, potentially setting the stage for the next significant price rally.
However, this interpretation can be misleading. Long-term holders are defined as wallets that have held BTC for 155 days or more. This week, we just surpassed 155 days since our last all-time high. So it is likely that many short-term holders from that period have simply moved into the long-term category without any new accumulation. These investors are now holding on to their BTC in anticipation of higher prices. So, in isolation, this chart does not necessarily indicate new buying activity from established market participants.
The Destruction of Coin Days: A Controversial Indicator
To further examine the behavior of long-term holders, we can look at the Supply Adjusted Coin Days Destroyed metric over the last 155-day period. This metric measures the speed of coin movement, giving more weight to coins that have been held for long periods. A spike in this metric could indicate that long-term holders holding a significant amount of Bitcoin are moving their coins, which likely indicates a large sell-off rather than accumulation.
We’ve seen a significant spike in this data recently, suggesting that long-term holders may be distributing rather than accumulating BTC. However, this spike is primarily distorted by one large transaction of around 140,000 BTC from a known Mt. Gox wallet on May 28, 2024. If we exclude this outlier, the data looks much more typical for this stage of the market cycle, comparable to periods in late 2016 and early 2017 or mid-2019 and early 2020.
Behavior of whale wallets
To determine whether whales are buying or selling Bitcoin, analyzing wallets that contain significant amounts of coins is critical. Checking wallets with at least 10 BTC (minimum ~$600,000 at current prices), we can evaluate the actions of significant market participants.
Since Bitcoin’s peak earlier this year, the number of wallets holding at least 10 BTC has increased slightly. Likewise, the number of wallets holding 100 BTC or more has also increased slightly. Given the minimum threshold that must be included in these charts, the amount of Bitcoin accumulated by wallets holding between 10 and 999 BTC could represent tens of thousands of coins purchased since our last all-time high.
However, the trend reverses when we look at larger wallets holding 1,000 BTC or more. The number of these larger wallets has decreased slightly, indicating that some large holders may be spreading their BTC around. The most notable change is in wallets holding 10,000 BTC or more, which have dropped from 109 to 104 in recent months. This suggests that some of the largest Bitcoin holders are likely making some profit or redistributing their holdings among smaller wallets. However, given that most of these extremely large wallets tend to be exchanges or other centralized wallets, it is more likely that they represent a collection of coins from traders and investors rather than any one person or group.
The Role of ETFs and Institutional Inflows
Since peaking at $60.8 billion in assets under management (AUM) on March 14, BTC ETFs have seen AUM decline by about $6 billion, but when you consider the decline in Bitcoin’s price since our all-time high, that roughly equates to an increase of about 85,000 BTC. While positive, the increase only negated the amount of newly mined Bitcoin over the same period, also 85,000 BTC. The ETFs helped reduce selling pressure from miners and perhaps from large holders, but did not accumulate enough to have a positive impact on the price.
Growing interest in retail
Interestingly, while large holders appear to be selling BTC, there has been a significant increase in smaller wallets – those holding between 0.01 and 10 BTC. These smaller wallets have added tens of thousands of BTC, indicating increased interest from retail investors. There has been a net change of around 60,000 bitcoins from 10+ BTC wallets to wallets under 10 BTC. This may seem alarming, but given that we typically see millions of bitcoins moving from large, long-term holders to new market entrants throughout a bull cycle, it is not a cause for concern at this time.
Conclusion
The narrative that whales have been accumulating Bitcoin on dips and during this chopsolidation period does not appear to be true. While the long-term holders supply figures initially appear optimistic, they largely reflect short-term holders moving into the long-term category rather than new accumulation.
The increase in retail holdings and the stabilizing influence of ETFs could provide a solid foundation for future price growth, especially if we see renewed institutional interest and continued retail investment inflows after the halving, but they are currently not having a significant impact on Bitcoin’s price growth.
The real question is whether the current distribution phase will take hold and set the stage for a new round of accumulation that could take Bitcoin to new highs in the coming months, or whether this flow of old coins to new entrants will continue and likely suppress potential upside for the remainder of our bull cycle.
🎥 For a more in-depth look at this topic, check out our recent YouTube video: “Are Bitcoin Whales Still Buying?”
And don’t forget to check out our latest YouTube video where we discuss how we can potentially improve one of Bitcoin’s best performers:
