It is almost impossible to separate institutional investors from individual investors through on-chain data. However, the trend shows that despite the rally, investors with a lot of capital are increasingly entering the Bitcoin market.
Why do whales keep buying more Bitcoin?
According to Santiment’s analysts, approximately $ 647 million worth of Bitcoin was likely transferred from small addresses to large addresses.
Addresses with more than 1,000 BTC or more are considered whales by many analysts as 1,000 BTC equals more than $ 27 million at the current price of $ 27,100. The analysts wrote:
“In the past 48 hours since Christmas, #Bitcoin addresses with $ 1,000 or more BTC now hold 0.13% more of the supply than smaller addresses previously. This is approximately 24,158 tokens, which translates to $ 647.7 million at the time of writing. “
Bitcoin has nearly tripled since mid-2020, and the benefit to BTC is arguably limited for the foreseeable future.
Still, most of the data points on the chain show that fewer whales are being sold at major exchanges. Ki Young Ju, the CEO of CryptoQuant, said:
BTC whales seem exhausted to sell. There are fewer whales that go to fairs. I think this bull run will continue as institutional investors keep buying and the Exchange Whale Ratio stays below 85%. “
There are two main reasons why whales collect Bitcoin at the current price range.
First, despite Bitcoin’s overloaded rally, whales might think that would break the $ 30,000 psychological barrier. If so, option data suggests that $ 36,000 could be a likely target in the near term.
Second, there is no solid reason to expect a major correction to fall apart of the CME gap and the high funding rate in the futures market.
But if Bitcoin consolidates after each rally, as it has in the past two days, then the funding rate would likely normalize. When that happens, the derivatives market will become less overheated, increasing the likelihood of another rally.
A pseudonymous trader known as “Byzantine General” said the market is currently sending conflicting signals. Both long and short contract holders are aggressive, which allows for both long and short squeeze. He said:
“Such contradictory signals, marg. Both longs and shorts are overly aggressive lol. I should probably sit on my hands. “
The likely short-term scenario is more consolidation
Typically, the price of Bitcoin on Coinbase is higher than that of Binance and other Tether-dependent exchanges. However, in the past week, Bitcoin was trading slightly lower on Coinbase at around $ 20 to $ 30.
While the gap is small, it shows that the US, which drove Bitcoin’s rally in December, may see declining demand from buyers. But the Asian market and derivatives market are seeing increasing demand from buyers.
Considering that the demand for Bitcoin in the US spot market appears to be cooling, Bitcoin could consolidate longer with lower volatility.