The volatile nature of cryptocurrencies is well known to both traders and investors in the market. This year, the price of Bitcoin has seen both highs and lows. After a bullish January where prices of the digital asset surged to pre-FTX collapse levels, the asset’s momentum suddenly hit a roadblock, signaling possible sell-offs. However, a decline in whale activity could imply that the downtrend is still ongoing.
Bitcoin Whale Numbers Fall To 2019 Levels
Whales are wallets that hold more than 1,000 BTC, and they have a significant impact on the market due to the volume of their transactions. According to data from Santiment, the number of Bitcoin whales reached a new all-time high in early February, which was followed by an impressive 70% rally for the digital asset, with its price surging past $25,000 for the first time in six months.
Increased whale accumulations have also come with positive movements in price, given that these investors take a significant portion of supply out of the market. However, with the decline in numbers of whales holding 1,000 or more BTC, there could potentially be more downside to come.
Santiment notes that this number slid to a new three-year low, with a total of 378 wallets losing their whale status from the 2,489 all-time high figure recorded in February. There are currently only 2,011 wallets holding 1,000 BTC or more, down from its yearly highs of 2,266 wallets.
Will Whales Drag Down The Price?
The decline in the balances of Bitcoin whale wallets could explain the current downtrend in the market. When large investors reduce their holdings, it typically means they have sold them off, which has an impact on the market. Additionally, in 2019 when the figure was this low, Bitcoin’s price also struggled tremendously.
However, the decline in the number of large BTC whales could also signal more decentralization in the network as coins circulate to smaller retail holders. While it may end up being negative for the price of the digital asset in the short term, it carries more long-term positive implications.
The decrease in the number of whale wallets also shows that if the Bitcoin bottom has not yet been established, it is close to being established ahead of the next halving in 2024.
The Future of Bitcoin
It is essential to note that the current downtrend may not be an isolated event. Bitcoin’s price is highly unpredictable, and with ongoing innovations in the ecosystem, it has the potential to rebound in a short amount of time.
At the time of writing, the price of Bitcoin is trending at $23,404, down 1.49% in the last 24 hours, with an additional 3.62% loss on the seven-day chart. Traders and investors are keeping a keen eye on the market’s indicators to determine any notable trends in the coming days and weeks.
In conclusion, the decline in whale activity could signal further downside for the price of Bitcoin. With the current indicators, it seems that the market is undergoing a phase of consolidation. However, the decentralized nature of the network could hold positive outcomes for long-term investors. Only time will tell where Bitcoin’s price will head, but traders and investors must keep an eye on the market’s trends to make informed decisions.