After U.S. inflation data that was in line with market expectations and above the February 2023 highs of $25,200, the price of bitcoin surged over those levels. The possible consequences for the world banking system in March further pushed Bitcoin investing as a non-correlated global hedging tool akin to gold. From the beginning of the month, there has been an increase in the link between gold and Bitcoin.
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Yet, there are significant concerns raised by the fact that institutions are already net sellers of bitcoin in 2023. Bitcoin whales, defined as wallets with 10 to 10,000 BTC, have not joined the recent rise. The rise appears to be mostly driven by ordinary investors. A short-term decline in Bitcoin values might result from the difference between whale and retail investing.
Data from the crypto markets on institutional crypto asset movements indicate the biggest two-week sell-off from investment funds since March 6. The positive inflows for this year have been canceled out by the outflows, making the net year-to-date flow a negative $177 million.
Additional data that tracks a portfolio of international institutional funds that have exposure to digital assets, including Grayscale, CoinShares XBT, 21Shares, Purpose, and 3iQ.
“May be driven, in part, by the need for liquidity during this banking crisis, a similar situation was seen when the COVID panic first hit the market in March 2020.” writes James Butterfill, head of research at CoinShares, in the study.
The fact that whales are not trying to sell the current rise is promising. But, when the asset’s values climb, whale buyers will be needed to jump on board; else, the surge can end abruptly.
Also, there has probably been a little whale migration from stablecoins as a result of the recent depegging of USD Coin and the governmental crackdown on Binance USD. Addresses holding between $100,000 and $10 million in stablecoins have been declining, although not significantly, according to Santiment.
The values of Bitcoin and other cryptocurrencies benefit from an influx of stablecoins. Large-scale exchanges from stablecoins to dollars, however, reduce the market’s purchasing power. The fact that whale BTC holdings have not increased shows that the movements are more indicative of the latter scenario.
BTC miners are yet another essential participant in the Bitcoin ecosystem. Since the beginning of 2023, the BTC holdings in one-hop miner addresses—BTC accounts that receive currency from mining pools—have been continuously rising.
Retail investors, on the other hand, frequently enter and leave the market at the wrong times. Consequently, the involvement of whale investors is essential for maintaining faith in the current boom.
Technically speaking, the BTC/USD pair seems strong on a daily time scale, with a successful breakout and consolidation above its widening wedge formation. Presently, the breakdown levels between $28,000 and $30,000 for June 2022 are providing resistance to purchasers.