The recent price volatility of Bitcoin has raised questions about whether large-scale Bitcoin hodlers are utilizing price dips to accumulate more Bitcoin. While some initial metrics may suggest an increase in long-term holdings, a closer look reveals a more nuanced story, especially in the current period of choppy consolidation.
Are Long-Term Holders Accumulating?
At first glance, it may seem like long-term Bitcoin holders are increasing their holdings. According to the Long-Term Holder Supply, the amount of BTC held by long-term holders has risen from 14.86 million to 15.36 million BTC since July 30th. This surge of approximately 500,000 BTC has led to speculation that long-term holders are actively buying the dip, potentially laying the groundwork for a significant price rally.
However, this interpretation may be misleading. Long-term holders are categorized as wallets holding BTC for 155 days or more. Since we have recently passed 155 days since the last all-time high, it is likely that many short-term holders from that period have transitioned into the long-term category without any new accumulation taking place. These investors are holding onto their BTC in anticipation of higher prices. Therefore, this chart alone may not indicate new buying activity from established market participants.
Coin Days Destroyed: A Contradictory Indicator
To delve deeper into the behavior of long-term holders, we can analyze the Supply Adjusted Coin Days Destroyed metric over the recent 155-day period. This metric measures the velocity of coin movement, giving more weight to coins held for extended periods. A spike in this metric could suggest that long-term holders with significant amounts of Bitcoin are moving their coins, signaling more selling rather than accumulating.
There has been a notable increase in this data recently, indicating that long-term holders might be distributing rather than accumulating BTC. However, this spike is largely influenced by a single massive transaction of around 140,000 BTC from a known Mt. Gox wallet on May 28, 2024. Excluding this outlier, the data aligns more closely with previous market cycles, such as late 2016, early 2017, or mid-2019 to early 2020.
The Behavior of Whale Wallets
Examining wallets holding substantial amounts of coins is crucial to determine whether whales are buying or selling Bitcoin. By looking at wallets with at least 10 BTC (equivalent to ~$600,000 at current prices), we can assess the actions of significant market participants.
Since Bitcoin’s peak earlier this year, there has been a slight increase in the number of wallets holding at least 10 BTC. Similarly, wallets holding 100 BTC or more have also experienced a modest rise. When considering the minimum threshold for inclusion in these charts, the amount of Bitcoin accumulated by wallets holding between 10 and 999 BTC could represent tens of thousands of coins bought since the last all-time high.
However, the trend shifts when looking at larger wallets holding 1,000 BTC or more. The number of these large wallets has slightly decreased, indicating that some major holders might be distributing their BTC. The most significant 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 taking profits or redistributing their holdings across smaller wallets. It’s important to note that the majority of these extremely large wallets are typically exchanges or other centralized wallets, likely containing a mix of trader and investor coins rather than belonging to a single individual or group.
The Role of ETFs and Institutional Inflows
BTC ETFs peaked at $60.8 billion in assets under management (AUM) on March 14th, showing a subsequent decrease of approximately $6 billion. However, considering the price decline of Bitcoin since the all-time high, this decrease roughly translates to an increase of around 85,000 BTC. While this is positive, the increase only offsets the amount of newly mined Bitcoin during the same period, also 85,000 BTC. ETFs have helped alleviate selling pressure from miners and potentially large holders but have not accumulated enough to significantly impact the price positively.
Retail Interest on the Rise
Interestingly, while large holders may be selling Bitcoin, there has been a significant uptick in smaller wallets holding between 0.01 and 10 BTC. These smaller wallets have added tens of thousands of BTC, indicating increased interest from retail investors. Approximately 60,000 BTC have seen a net transfer from wallets holding 10+ BTC to those holding less than 10 BTC. While this transfer may raise concerns, it’s important to note that transitions of millions of Bitcoin from large, long-term holders to new market participants are common throughout an entire bull cycle.
Conclusion
The narrative of whales accumulating Bitcoin during dips and choppy consolidation does not seem to hold true. While long-term holder supply metrics may initially appear positive, they largely reflect the transition of short-term holders 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 appreciation, especially if we witness renewed institutional interest and continued retail inflows post-halving. However, these factors are currently contributing minimally to any Bitcoin price appreciation.
The crucial question is whether the current distribution phase transitions into a new accumulation phase, potentially propelling Bitcoin to new highs in the coming months, or if the flow of old coins to new participants continues, likely limiting the potential upside for the remainder of the bull cycle.
🎥 For a more detailed analysis of this topic, watch our recent YouTube video: Are Bitcoin Whales Still Buying?
Don’t forget to also view our latest YouTube video discussing potential improvements to one of the best Bitcoin metrics.
