Robert Steinadler, 9 months ago

Whales keep accumulating Bitcoin – What to make of this?

Transactions on the Bitcoin blockchain are not anonymous. The world is watching what is going on and while an observer might not be able to tell who is the owner of a certain wallet each and every movement can be tracked. This includes the richest individuals and their behavior during the recent crypto crash. These entities are leaving clues about how they view the market and how they are playing it in real-time.

Which conclusions can be derived from the most recent moves? And how did they react during the recent sell-off?

Whale watching on the blockchain

The biggest market participants are called whales since their Bitcoin holdings are considered to be the most significant among all other investors. Of course, some entities avoid their Bitcoin address being associated with the whale status by splitting their riches into smaller batches and keeping them on separate wallets and addresses.

One of the most famous addresses is 1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ which is holding 129.106 BTC at the time of writing. Some believe that is associated with an exchange business while others argue that it has to belong to a single large holder.

Interestingly enough most exchange wallets are well known and flagged on most block explorers. Those with the largest holdings are typically cold wallets that hold vast amounts of BTC.

Accumulation during the crash

Data suggests that the entity behind “1P5ZED” kept accumulating Bitcoin during the crash, adding another 1432 BTC between June 14th and June 17th. Of course, this doesn’t seem much compared to the overall holdings but it suggests that the holder kept on accumulating BTC rather than trying to sell the massive stack.

Retail investors often look for advice on how to handle a situation like the crash that recently occurred. Some interpret the actions of larger entities on the blockchain as a call to action and think it is best to mimic those moves.

It is important to keep in mind that the situation of retail investors is not comparable to those entities. They might risk a few million dollars more but that does not mean that any other person should take the same risk since it is unknown how much capital these whales have at their disposal and how much they put at stake. In other words, you cannot come to a conclusion about what their risk management looks like. Therefore, one is well-advised not to jump to any conclusions when watching whales moving in and out of the market.

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