Bitcoin price has been in a downtrend for almost a year now. What is the behavior of crypto whales and retail investors in the current market conditions?
After making an all-time high at $69,000 in November, Bitcoin price is down nearly 70% in one year. It is trading near $20,200 as of writing.
Crypto Whales Are Selling Bitcoin
According to data from Santiment, the crypto whales have been dumping their Bitcoin since last year while retailers are accumulating. Whales owned nearly 50% of the Bitcoin supply in Oct. 2021. Gradually, they dumped their bags.
The blue line in the chart below represents wallets holding 100 to 10,000 Bitcoins. It has been in gradual decline since last year. The crypto whales own 45% of the Bitcoin supply compared to the previous year’s 50%.
Large mining companies, like Core Scientific, have already capitulated. According to a U.S. Securities and Exchange Commission (SEC) filing, they are down to holding just 24 BTC in Oct. 2022.
Whereas retailers seem to be buying from crypto whales. The red line shows wallets that own 0.01 to 10 BTC, i.e., retailers. Retail owned 14% of the Bitcoin supply in Oct 2021, and now, they own 15.80% of the supply.
The red line has rapidly risen since Oct 2021, while the blue is declining. This indicates that retailers were accumulating while crypto whales were dumping.
Further Selling or Time for BTC Accumulation?
According to a Morgan Stanley report, 78% of BTC accumulated in the last six months has not been used in any transactions. Their average breakeven price is around $22,300. They may dump their bags to break even when the price of Bitcoin touches the $22,000 level.
Report from Morgan Stanley strategists Sheena Shah and Kinji Steinmetz:
Almost 1 year into the bitcoin bear market, most who bought bitcoin in 2021 are facing heavy losses and appear to be waiting for any rallies to close their position. A record number of bitcoin units haven’t been used for any transaction in the past 6 months, currently at 78% of total and this number continues to rise.
What this means, if we oversimplify a bit, is that those who bought/received bitcoin more than 6 months ago are holding onto their positions, with some likely waiting for a price recovery. For the remaining 22% of bitcoin units held by the shorter term investors who did transact bitcoin in the past 6 months, estimates suggest their average breakeven price is just over $22.3k