Data shows Bitcoin whales have stepped up their buying since Christmas

On-chain data shows that Bitcoin (BTC) whale purchases have increased since Christmas Day. This shows that high-net-worth investors are continuing to buy up new supply of Bitcoin.

It is almost impossible to distinguish institutional investors from individual investors through on-chain data. However, this trend shows that despite the rise in Bitcoin prices, investors with large capital are increasingly entering the Bitcoin market.

Large Bitcoin Supply Holders Source: Santiment

Why Do Whales Keep Buying More Bitcoin?

According to analysts at Santiment, approximately $647 million in Bitcoin may have moved from small addresses to large ones.

Addresses holding more than 1,000 Bitcoins or more are considered whales by many analysts, as 1,000 Bitcoins is equivalent to more than $27 million at the current price of $27,100. The analyst wrote:

“Over the past 48 hours since Christmas, addresses holding 1,000 or more Bitcoin now own 0.13% more supply than smaller addresses previously held. That’s roughly 24,158 Bitcoins, which at the time of writing is equivalent to $647.7 million.”

Having nearly tripled since mid-2020, it can be argued that Bitcoin’s upside is limited in the near future.

Still, most on-chain data shows that fewer whales are selling on major exchanges. CryptoQuant CEO Ki Young Ju said:

“Bitcoin whales seem to be tired of selling. Fewer whales are depositing BTC into exchanges. I think this bull run will continue as institutional investors continue to buy and the exchange whale ratio remains below 85%.”

Bitcoin exchange whale ratio. Source: CryptoQuant

There are two main reasons why whales may be hoarding Bitcoin in the current price range.

First, while Bitcoin’s rally is overdone, whales may believe that the psychological barrier of $30,000 will break. If so, options data suggests that $36,000 could be a target in the short term.

Second, there is no good reason to expect a major correction other than the CME gap and high funding rates in the futures market.

But if Bitcoin consolidates after each rally, as it has over the past two days, then funding rates could normalize. When that happens, derivatives markets will become less overheated, increasing the likelihood of a new rally.

An anonymous trader named "Byzantine General" said that the market is currently sending conflicting signals. Both long and short contract holders are aggressive, which makes it possible for both longs and shorts to be squeezed. He said:

“Such conflicting signals. Both bulls and bears are too aggressive. I should probably sit on it.”

More consolidation is likely in the near term

Typically, the price of Bitcoin on Coinbase is higher than on Binance and some other exchanges. However, over the past week, Bitcoin has been trading slightly lower on Coinbase, at around $20 to $30.

Although the spread is narrow, it suggests that demand from U.S. buyers, which drove bitcoin higher throughout December, may be slowing. But demand from buyers in Asian markets and derivatives is increasing.

Considering that demand for Bitcoin in the U.S. spot market appears to be cooling, Bitcoin may consolidate for a longer period of time with lower volatility.

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