How crypto whales and retail investors are behaving in this bear market
Bitcoin price has been in a downward trend for almost a year now. What is the behavior of crypto whales and retail investors in today’s market conditions?
After hitting an all-time high of $69,000 in November, the Bitcoin price is down nearly 70% in one year. It is trading near $20,200 at the time of writing.
Crypto whales sell Bitcoin
According to data from Santiment, crypto whales have been dumping Bitcoin since last year as traders accumulate. Whales owned almost 50% of the Bitcoin supply in October 2021. They gradually dumped their bags.
The blue line in the chart below represents wallets containing 100 to 10,000 Bitcoins. It has been in gradual decline since last year. Crypto whales own 45% of the Bitcoin supply compared to last year’s 50%.
Major mining companies, such as Core Scientific, have already capitulated. According to a US Securities and Exchange Commission (SEC) filing, they are down to just 24 BTC in October 2022.
While retailers seem to be buying from crypto whales. The red line shows wallets that own 0.01 to 10 BTC, i.e. traders. Retail owned 14% of the Bitcoin supply in October 2021, and now they own 15.80% of the supply.
The red line has been rising rapidly since October 2021, while the blue line is declining. This indicates that traders were accumulating while crypto whales were dumping.
Further Sales 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 can 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 big losses and seem to be waiting for any rally to close their positions. A record number of bitcoin units have not been used for any transaction in the past 6 months, currently at 78% of the total, and this number continues to rise.
What this means, if we simplify a bit, is that those who bought/received bitcoin more than 6 months ago are holding their positions and some are probably waiting for a price recovery. For the remaining 22% of bitcoin units owned by short-term investors who have traded bitcoin in the past 6 months, estimates suggest their average breakeven price is just over $22.3k
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