Decline in Bitcoin whale activity could signal further downside for the BTC price
Over the past month, the price of bitcoin has been on the decline. This comes after a fairly bullish month of January where prices of the digital asset returned to pre-FTX collapse levels. But while momentum has hit a roadblock, signaling the selloff may be over, a slowdown in whale activity could mean this isn’t the end of the downtrend.
Bitcoin whale numbers fall to 2019 levels
In early February, the number of Bitcoin whales, which are wallets with more than 1,000 BTC, hit a new all-time high, according to data from Santiment. What followed was an impressive 70% rally for the digital asset, which saw its price rise above $25,000 for the first time in six months.
This was not surprising as increased whale accumulations have also brought positive movements in price given that they take a significant part of the supply out of the market. But with the number of whales holding 1,000 or more BTC dwindling, there could be more downside ahead.
Santiment notes that this number fell to a new three-year low with a total of 378 wallets losing their whale status from the 2,489 all-time high recorded in February. There are currently only 2,011 wallets holding 1,000 BTC or more, down from the annual peak of 2,266 wallets.
Number of whales holding over 1,000 BTC falls to three-year low | Source: Santiment
Will whales drive down the price?
The decline in the balances of bitcoin whale wallets may explain the current downward trend in the market. Usually, when investors reduce their holdings, it means they have sold them, and with these big whales selling millions of dollars worth of coins, that will certainly have an impact on the market.
It is also important to note that in 2019 when the number was so low, bitcoin’s price also struggled enormously. But it also provided an opportunity for investors to accumulate coins at low prices before the bull market resumed in 2019.
BTC price falls below $23,400 | Source: BTCUSD on TradingView.com
In addition, the decline in the number of large BTC whales could also signal more decentralization in the network as coins circulate to smaller retailers. So while it may end up being negative for the price of the digital asset in the short term, it has longer term positive implications.
The decrease in the number of whale wallets also shows that if the bitcoin bottom has not been established yet, it is close to being established before the next halving in 2024.
At the time of writing, the price of bitcoin is trending at $23,404. It is down 1.49% in the last 24 hours with another 3.62% loss on the seven-day chart.
