Bitcoin and Ethereum whales are preparing to buy big stacks

Source: Wit Olszweski – Shutterstock

• Data from Santiments shows that whales are accumulating large amounts of stablecoins which could signal an entry into Bitcoin and Ethereum soon.
• Whales have been encouraged by the continued support of stablecoins from governments around the world.

The crypto market is witnessing a sustained wave of stablecoin accumulation even as the general bear market continues. According to behavioral analytics platform Santiment, whales with already significant accounts are adding more stablecoins to their portfolios.

Sentiment reports that USDC and USDT are the preferred stablecoins for these large account holders. According to an image posted on Twitter, USD coin holders with at least $100k and up to $10m have increased their holdings by 12.1 percent since the beginning of August. The image also shows that Tether holders with $100k to $10m have added 8.6 percent more USDT.

🐳 #Stablecoin accumulation is shown by #crypto whales over the past three months, and there is significantly more buying power from large traders compared to the June bottom. USD USD and $USDC being accumulated has historically heralded price increases. pic.twitter.com/jzh8GIsVNL

— Santiment (@santimentfeed) 8 November 2022

Santiment did not suggest a reason for the renewed interest in collecting stablecoins or explain why the whales appear to have more purchasing power. Regardless, the accumulation may signal more faith in stablecoins over fluctuating assets, especially since the market is currently volatile. The buy chant may also signal more market volatility in the near future.

Both stablecoins are the two largest in the market, with Tether’s USDT being the third largest and Circle’s USDC being the fifth. Months ago, USDC seemed more intent on closing the gap as it rose to become the market’s fourth largest asset by market capitalization. Since the start of the year, Circle has been pumping more USDC into the market to meet a general and growing demand for liquidity.

Stablecoin regulation could bode well for whales

Stablecoins may be better equipped for favorable policies from the government, a move that could prompt whales to acquire more. Recently, Federal Reserve Deputy Chairman for Board Oversight, Michael Barr, appeared to endorse these assets. Speaking at DC Fintech Week in October, Barr believes there is great potential for stablecoins to be used as money. He also specified that he does not share the same sentiments for other assets such as Bitcoin.

As optimistic as he seemed, the Fed vice chairman expressed concern about risks associated with stablecoin use. According to him, the banks may not be able to ensure legal use. Barr said:

For example, with some models being explored, the bank may not be able to track who holds the tokenized liability or whether the token is being used in risky or illegal activities.

Barr admitted there may be options to ensure customers don’t ignore established laws. However, he still worries that it may be difficult for older banks to enforce the options.

Although work is ongoing on technical solutions to deal with these risks, it remains an open question whether banks can engage in such arrangements in a manner that is consistent with safe and sound banking and in accordance with relevant law.

Barr concluded by advising interested banks to start early consultations with regulators to discuss these options and ensure they are legally acceptable.