Whales and herds disrupt bitcoin accumulation as interest likely surges 50 bps
Whales and herds disrupt bitcoin accumulation as interest likely surges 50 bps.
The latest data from CoinMetrics shows Bitcoin (BTC) supply surge at whale addresses faltering as the price continues its intraday correction towards $40,000.
Whales and hatchlings take a break to accumulate bitcoin
The total number of bitcoins held at addresses with a minimum balance of 1,000 BTC hit 8.10 million BTC on Feb. 16, up nearly 0.12% month-on-month. Meanwhile, earlier this year, that balance reached 7.91 million BTC.
Bitcoin supply to addresses with balances greater than 1,000 BTC | Source: CoinMetrics, Messari
Notably, the cumulative behavior of the richest bitcoin wallets began to slow after BTC closed above the $40,000 region in early February. Their supply is oscillating between 8.09 and 8.10 million BTC while the price is oscillating between $41,000 and $45,500, suggesting that demand from whales within the aforementioned trading area is easing.
A similar trend was seen for addresses with less than 1 BTC, also known as “baby fish”, suggesting that they paused bitcoin accumulation in February when the price entered a range of $41,000 to $45,500.
It looks like the accumulation trend is stalling #BTC approx. $44,000:
???? No outbreak for the whale addresses.
???? Plateau for the small fish.
I think everyone is cautious while waiting to see what the FOMC will do next. ???????? pic.twitter.com/Ou8w1t7U5m
— Econometrics (@ecoinometry) February 17, 2022
Ecoinometric analyst Nick has blamed the Federal Reserve’s rate cut plans for making bitcoin whales and broods “cautious.” In his statement last week, he warned that “if Bitcoin benefits greatly from quantitative easing, it could also be harmed by quantitative tightening.”
“That’s why inflation shows no signs of slowing down and that’s a big thing for the economy.”
There is no official rate hike chart yet
On February 16, the Federal Open Market Committee released minutes from its January meeting, revealing a group of central bank governors preparing to raise interest rates to curb inflation.
However, the minutes did not mention when and by how much the rate hike would take place.
Vasja Zupan, president of Dubai-based Matrix Exchange, said the Fed’s futures market now has the potential to hike rates by 50 basis points in March, up from 63% previously. But the minutes themselves do not address this rate hike.
“Of course, the mixed macroeconomic outlook has left Bitcoin’s most influential investors, including whales and long-term holders, in the dark.
The leading cryptocurrency has formed a clear daily trend in the US stock market. This is not a long-term uptrend, however, as Fed chiefs are likely to get more clarity on the rate chart after March’s rate hike.
Investors still hold
Researcher Willy Woo came up with it perspectives Long-term uptrend for Bitcoin, noting that recent price declines, including a 50% drop from $69,000, were caused by sell-offs in the futures markets, not by investors on the chain.
Bitcoin Supply/Demand Among On-Chain Holders vs. Futures Market | Source: Willy Woo
In a note published on February 15, Woo said:
“During the previous bear period (May 2021), investors simply sold their BTC for cash. However, assuming investors want to hold cash in the current period rather than converting their capital into another asset such as stocks, it is much more profitable to hold BTC while short in the futures market.”
Just like Glassnode did noticeDuring the May-July 2021 trading season, investors tend to de-risk the bitcoin futures market while selling coins on the spot market, which is confirmed by an increase in cash flow to exchanges. But the current bear market is showing the opposite, as shown in the chart below.
“Bitcoin is flowing out of all exchanges and into investors’ wallets at a rate of 42,900 BTC per month. This trend has been going for about 3 weeks now, current support is recovering since BTC hit a low of $33,500.”
Change in bitcoin capital flow on exchanges | Source: Glassnode
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