Bitcoin Whales Accumulate as Market Hints at Potential Supply Shock

Despite the recent market crash that saw Bitcoin (BTC) plummet below $50,000, on-chain data suggests a growing trend of whale accumulation and potential signs of a Bitcoin supply shock on the horizon.

BTC Whales Accumulate During Dip

Analysis by Santiment reveals a surge in large-scale Bitcoin transactions during the market downturn. Wallets holding between 10 and 1,000 BTC saw a significant increase in buying activity, suggesting whales capitalized on the dip. This is further corroborated by CryptoQuant data, which indicates a movement of nearly half a million BTC (approximately $22.94 billion) into “permanent holder addresses” over the past month.

Supply Squeeze on Exchanges

Bitcoin exchange reserves have dipped to new lows following the crash, with no significant rebound despite the selling pressure. This trend, coupled with the ongoing accumulation by whales, suggests a potential supply squeeze on exchanges. If demand remains constant or increases, a scenario favoring a rapid price rise becomes more likely.

Bitcoin Velocity on the Rise

Bitcoin velocity, a measure of how frequently the cryptocurrency changes hands, has also shown signs of a potential uptrend. Historically, such trends have coincided with periods of excitement and price volatility. However, the sustainability of this uptrend hinges on continued liquidity entering the market.

Institutional Interest Remains Strong

While some retail investors may have been spooked by the crash, institutional interest in Bitcoin seems unwavering. Japanese investment firm Metaplanet recently secured a loan to purchase more Bitcoin, and BlackRock, the world’s largest asset manager, continues to hold its position despite the recent market downturn. These actions highlight the long-term bullish sentiment among some major players in the financial world.

Possible Supply Shock and Future Implications

The confluence of declining exchange reserves, whale accumulation, and potential increases in demand could create a supply shock scenario. This would likely lead to significant price volatility, with both sharp climbs and dips.

Ki Young Ju, CEO of CryptoQuant, suggests that within a year, major financial institutions, companies, or even governments could disclose substantial Bitcoin acquisitions made during the recent accumulation phase. This revelation could trigger regret among retail investors who missed the opportunity to buy during the dip.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

Related Articles

MicroStrategy Stock (MSTR) Price Soars 9% as BTC Breaks Above $90K

4 hours ago

Save

Galaxy Digital Dumps $105M in Ethereum for Solana—Is ETH Losing Ground?

9 hours ago

Save

New Era? Circle Launches $100B Stablecoin Infrastructure

9 hours ago

Save

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up commentsnew replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments