While many market segments sold their Bitcoin (BTC) in panic this week, the largest players in the digital currency appear to have bought the dip in large measure.
Whales Buy the Bitcoin Dip
According to data provided by CryptoQuant CEO Ki Young Ju, active Bitcoin whale addresses collected 47,000 BTC within 24 hours of Bitcoin’s drop this week below $57,000 per coin.
An active whale address is defined as having at least 100 BTC, and engaging in on-chain activity in the past day. Young Ju said the balance discounts centralized exchanges and Bitcoin miners, but includes certain Bitcoin custodians such as Bitcoin ETF providers.
“We are entering a new era,” wrote Young Ju on Twitter regarding the data. Although whale balances have increased significantly since Bitcoin spot ETFs were approved in the United States this year, the executive said this week’s jump in balances was “not related to the ETF.”
#Bitcoin Whales collected 47K $BTC in the last 24 hours. We are entering a new era. pic.twitter.com/SXgzToN8GU
— Ki Young Ju (@ki_young_ju) May 3, 2024
A day earlier, Young Ju highlighted how new Bitcoin whales, including spot ETF buyers, were sinking in their investments after Bitcoin fell below $60,800.
Similarly, analysis from Glassnode principal analyst James Check found that Bitcoin’s broader short-term holder cost basis on Wednesday was $59,600. Statistically, short-term shareholders are more likely to panic sell their holdings when their cost basis disappears, thereby exacerbating price volatility at that time.
Regardless, Check also said that the dip is a standard measure seen in Bitcoin bull markets in general, and predicted this would be a good time to buy. By Friday, Bitcoin had surged back to $62,700, proving profitable for anyone who followed his advice.
Interpreting Data
According to TXMCtrades analysts, the increase in whale address balances does not actually represent whales accumulating coins, but rather indicates a “non-malicious flow of wallet management” among larger entities.
“There are hundreds/thousands of unidentified on-chain entities with huge footprints, but people who don’t look at this data all day will be driven to wild conclusions,” he wrote on Twitter on Friday.
Bitcoin ETF data shows that the Grayscale Bitcoin Trust (GBTC) had net inflows on Friday for the first time since it launched as a Bitcoin spot ETF, perhaps marking the first strong day of inflows for Bitcoin ETFs broadly in nearly a month.