Sell-Off by Small Bitcoin Traders Contrasted by Increasing Whale and Shark Holdings (2024)

Bitcoin has experienced its most significant decline in the current cycle and is currently trading at over 25% lower than its all-time high.

Data also suggests that BTC’s current dip period has sparked contrasting behaviors among investors with whale and shark wallets, depicting a different pattern than the smaller holders.

Bitcoin’s Big Wallets Increasing

The world’s leading crypto has been plagued with the distribution of seized tokens from the German government and the defunct crypto exchange Mt. Gox.

According to the latest analysis by crypto analytic platform Santiment, small traders have been actively offloading their BTC holdings, potentially due to fear, which has contributed to the current selling pressure in the market.

Contrastingly, there has been a notable surge in the number of whales holding 1,000 BTC or more, and sharks, with 10 to 1,000 BTC, are increasing their bitcoin holdings and have remained unfazed by the factors that have prompted the small traders to reduce their stash. In fact, July has seen a net increase of more than 261 wallets that now hold at least 10 BTC.

This shift suggests that larger, more established investors are increasingly confident in bitcoin’s long-term potential, possibly signaling a bullish outlook despite the crypto facing the deepest correction since late 2022.

Correction Shallower Than Past Cycles?

According to Glassnode’s “The Week Onchain” newsletter, the current correction is significantly shallower compared to previous cycles, indicating a strong market structure and decreased volatility as BTC matures as an asset class. Glassnode analysts further noted that the sell-off has resulted in 83% of the supply held by short-term holders (addresses that have held bitcoin for less than 155 days) falling into unrealized losses.

Their estimates show that 2.9 million BTC (around $166.75 billion at current rates) out of the 3.2 million BTC ($184 billion) held by short-term holders were pushed below their cost basis due to the recent drop to $53,000. This has exerted considerable pressure on Bitcoin and the broader cryptocurrency market.

“Nevertheless, drawdowns across our current cycle remain favourable when compared to historical cycles suggesting a relatively robust underlying market structure.”