The stock market saw an impressive rebound earlier this year, even as concerns about economic and geopolitical tensions lingered. However, Bitcoin’s performance has been relatively muted. Since early May, Bitcoin has been trading in a narrow range of around $10,000. It momentarily exceeded this mark, reaching an all-time high close to $112,000, which is notable, especially with billions in ETF inflows during this time. Just this past Wednesday, Bitcoin ETFs recorded 12 consecutive sessions of inflows, aligning with a steady pace over the last few weeks. While this reflects strong institutional interest amid market fluctuations, Bitcoin’s value has only increased by about 2% this month, despite nearly $3.5 billion in inflows.
One factor contributing to this muted performance is that early adopters have held onto their Bitcoins for an extended period. According to Marx Thielen from 10X Research, the current major buyers of Bitcoin are often ETFs and more controlled assets that are waiting. He noted, “This change in ownership is happening, but we don’t see much genuine demand right now, as large wallet sales are nearly equal to the demand.”
Data indicates that wallets holding between 100 and 1,000 Bitcoins have been the biggest buyer cohort this year, while larger holders, known as whales (those with 1,000 to 10,000 coins) and mega-whales (over 10,000 coins), have been net sellers. Retail investors with smaller holdings have also been selling. The activity of these larger wallets has kept Bitcoin prices steady, but should selling pressure increase, it could disrupt any ongoing rally, according to Thielen.
Giulio Moreno, the research director at the company studying these trends, pointed out that historically, whales are characterized by holding between 1,000 and 10,000 Bitcoins. However, with the launch of Bitcoin ETFs and finance companies, a new group termed dolphins, holding 100 to 1,000 Bitcoins, has emerged. Entities like BlackRock and MicroStrategy have significantly large numbers of these smaller wallets, each owning hundreds of Bitcoins.
Interestingly, the largest Bitcoin holders appear to be miners in China. From 2013 to 2021, China accounted for roughly 75% of the global hashrate, the computational power used in securing Bitcoin transactions. Out of the 19.9 million Bitcoins mined so far, Chinese mining companies are estimated to have created around 11 to 15 million of them, and they likely still control at least 5 million Bitcoins. Notably, during previous peak periods, dormant wallets would awaken, flooding exchanges with Bitcoin for sale. However, this time, those wallets seem to be holding onto their coins.
The year has seen a significant shift in corporate acquisition strategies for Bitcoin, but the aggressive purchasing patterns have slowed down compared to last year. Thielen warned that if the sales from mega-whales continue to increase, deeper corrections could be expected. Conversely, if selling pressures lessen while accumulation by whales picks up, a new phase in the rally could start. Currently, the market experiences an imbalance that leans slightly bearish, with no clear sign of a breakout unless there are significant changes in tactical trading indicators. Until then, continued integration seems likely.
