The data showing a sharp decline in the number of Bitcoin whale wallets with a balance of over 10,000 BTC after a period of consolidation is causing concerns among many investors. However, this data can have various implications.
Whale wallets decreasing and prices declining: That is what happened during the temporary peak of Bitcoin in mid-2019. The subsequent decline in BTC was nearly 70%, from $13,500 to around $4,000. It is entirely reasonable to understand that entities holding significant amounts at that time did not expect much price increase, leading them to decide to exit their positions temporarily, adding selling pressure.
Whale wallets decreasing, prices surging: That is what happened during the most spectacular uptrend of Bitcoin in history, which is likely well-known to investors. Prior to that, whale wallets did not show a clear upward or downward trend but remained relatively stagnant. This could indicate that they were accumulating Bitcoin. After the accumulation phase, the whale wallets initiated a “distribution” process to capitalize on their holdings. This process involves whales pushing BTC into the market and selling it at higher prices to smaller investors.
Whale wallets increasing, prices increasing: This is the late stage of the downtrend in 2019 when the price of BTC experienced a significant decline from $20,000 to around $3,000. The subsequent price increase could be attributed to the re-accumulation phase by whales. This accumulation by whales contributed to the strong upward movement of BTC prices.
Whale wallets decreasing, prices decreasing: This is what investors witnessed throughout the year 2022. Prices consistently declined by nearly 80% while whale wallets continued to increase. It appears that retail investors became excessively fearful and sold off their BTC holdings to entities with more available capital.
BTC has increased by nearly 100% since the bottom, and during this price increase phase, the number of whale wallets has remained relatively stagnant.
Entering July, there are strong indications of a sharp decline in the number of whale wallets while BTC continues to experience high levels of volatility in its upward trend.
Therefore, the current process of profit-taking after accumulation or distribution by whales remains an uncertainty.