The rate at which the high-net-worth individuals, “whales,” and institutions are acquiring Bitcoins (BTC) has exponentially surged. Bitcoin whales have been aggressively buying since Christmas Eve, based on data compiled by on-chain data analytics firm. This data reveals that large Bitcoin holders and institutional investors are continuing to eat up more Bitcoin than the miners can supply.
Despite the ongoing BTC price rally which kicked off since the start of December, the number of investors with large capitals entering the Bitcoin market has increasingly surged. The current trend shows that it is almost impossible to separate institutional investors from individual investors.
What Is Pushing Whales To Acquire More Bitcoins?
A top crypto analyst from Santiment Analytics has opined that almost $647 million worth of Bitcoin is likely to get transferred from small addresses to large addresses.
Wallet addresses with more than 1000 Bitcoins are normally referred to as Whales in the crypto space. As Bitcoin consolidates at a current price above $27,500 at the time of writing,1000 BTC is equivalent to $27.5 million. The analyst wrote:
“Over the last 48 hours since Christmas, # Bitcoin addresses with 1000 or more $BTC now own 0.13% more of the supply that smaller addresses did previously. This is about 24,158 token, which translates to 647.7 M at the time of this writing”
In that context, the Bitcoin market capitalization has increasingly soared to nearly threefold surpassing the $500B mark since mid-2020. The forecasted upside for Bitcoin is somewhat limited in the near future.
Notably, data compiled by on-chain analytics firm indicates that fewer whales are selling across major exchanges. CryptoQuant CEO, Ki Young Ju, says:
“BTC whales seem exhausted to sell. Fewer whales are depositing to exchanges. I think this bull-run will continue as institutional investors keeps buying and whales ratio keeps below 85%”
Ki Young Ju has further revealed that institutional investors now own an average of $30 billion which translates to almost 16% of the total market cap, according to data fetched from Bitcoin treasuries. CryptoQuant CEO said:
“16% of the BTC realized market cap is now owned by institutional investors.
Realized market cap: $186 billion
Grayscale AUM: $19 billion
Institutional investors: $30 billion”
Nevertheless, there two major factors surrounding the Bitcoin market that are encouraging large Bitcoin holders to accumulate more bitcoin at the current price range.
First, many investors strongly believe that the ongoing Bitcoin rally will extend to break the $30000 barrier before the end of the year. If that happens, it is highly likely that $36000 could be a likely target since in between there is no significant resistance.
Secondly, no solid reason to anticipate a major correction to come soon other than the CME gap and high futures market funding rates.
Nonetheless, if BTC price consolidates after each rally, as witnessed in the past several days, the funding rate will soon stabilize. Interestingly, if that happens, the derivatives market will consequently cool which will lower the volatility; thus increasing the possibility of a new rally.
According to one pseudonymous crypto trader, “Byzantine General,” the current market is giving conflicting signals. He has said that both long and short contract holders are becoming aggressive, which makes both long and short squeezes possible. He stated:
“Such conflicting signals rn. Both long and short are being overly aggressive lol. I should probably sit on my hands.”
What Happens Next After A Bitcoin Consolidation?
Bitcoin has now taken a short break after a formidable rally to break its record highs. On December 28, bitcoin recorded a new all-time high of $28,560.
Bitcoin has entered yet another accumulation phase with many anticipating its price to explode after the end of a consolidation phase. Bitcoin is currently hovering at $27,500 with 24 hours trading volume of $44.5 billion making a price surge of 3.1%.
As usual, the price of bitcoin on Coinbase is slightly higher than on Binance and other Tether-reliant exchanges. But, in the last few weeks, Bitcoin has been trading slightly lower on Coinbase, by around $20 to $30. Although this gap is small, the U.S market that has spearheaded this rally throughout December may have experienced a lower buyer demand.
Nonetheless, the Asian market and other derivatives markets have increasingly recorded a spike in buyer demand.
In that context, considering the demand for Bitcoin in the U.S, the spot market appears to be cooling down. Bitcoin will probably consolidate for longer with slightly lower volatility. But some think that it is gearing up for a parabolic surge in 2021. Will it reach $100K in 2021 as some analysts have predicted?