Bitcoin

Key On-Chain Data Shows Whales Are Actively Accumulating Bitcoin

According to data from the on-chain market analysis firm Glassnode, whales appear to be actively accumulating Bitcoin.

Bitcoin addresses holding over 1,000 bitcoin. Source: Glassnode

Since the March 13th crash, when the Bitcoin price briefly dropped below $3,600, the number of Bitcoin addresses holding over 1,000 bitcoin has substantially increased. Glassnode researchers wrote:

The number of Bitcoin whales (entities holding ≥ 1K BTC) has been on an upwards trend for the past months. An indication that more high-net-worth individuals are entering the space to invest in Bitcoin in expectation of $BTC price appreciation.

Data indicates that many high-net-worth investors are seemingly expecting the price to increase in the medium term.

Why Are Whales Accumulating Bitcoin in the Current Climate?

As the BTC Times extensively reported throughout October, there were several negative events that could have amplified the selling pressure on Bitcoin.

When the U.S. Commodities and Futures Trading Commission (CFTC) and the Department of Justice (DoJ) charged BitMEX with violating the Bank Secrecy Act, Bitcoin sharply dropped in a matter of hours.

Since then, it has strongly recovered from below $10,500 to as high as $11,491 on Binance, in less than ten days.

Based on data from Whalemap and Glassnode, it is possible that whales aided Bitcoin's recovery by heavily accumulating the dominant cryptocurrency.

There are several reasons whales might have found the $10,500 level a compelling area to purchase bitcoin. 

First, the $10,400 to $10,570 price range has large whale clusters, which means many whales have bought bitcoin within that range. Whales might have doubled down on their position by accumulating additional bitcoin during the dip.

Second, on-chain analysts say that Bitcoin fundamentals remain strong. Willy Woo, founder of Woobull.com, said fundamentals potentially suggest a strengthening momentum in 2021. 

This is one of the few times in my Bitcoin career where the fundamentals (on-chain data and metrics from infrastructure players) are in moon mode, yet the market is not woke to it. They will be by 2021. This is an opportunity I've not seen since mid-2016.

High Time Frame Charts Point Toward Compelling Technical Structure

Atop the optimistic fundamental factors, technical analysts and chartists, including Peter Brandt, state that the high time frame charts of Bitcoin are highly optimistic.

High time frame charts primarily refer to the weekly and monthly charts of Bitcoin. They show a longer Bitcoin price cycle, which allows analysts to take into consideration the broader context of the market cycle.

written by

Joseph Young is a financial analyst based in South Korea. He has covered Bitcoin and the crypto market since 2013. He regularly contributes to the BTC Times, Forbes, and Cointelegraph.