Bitcoin has already hit another All-time high (ATH) of just above $49k as I begin to write this piece — first getting impetus from the news of Tesla taking a massive position of $1.5 billion in the premier digital currency and some follow-up action on the news of an impending mainstream adoption is keeping the price of not just the BTC, but the whole Cryptoverse well supported. Ethereum has also hit another ATH around $1876, as the total market cap of cryptos approaches $1.5 trillion.
And when we talk about mainstream adoption, it wasn’t just Tesla’s swollen interest in Bitcoin that sparked the price jump — two of the biggest credit card merchants have announced support for cryptos going forward, along with two U.S institutions getting approval to operate as regulated digital asset banks. This is all on top of the ballooning institutional investment interest that we have seen in BTC over the past year.
These so-called ‘Whales’ have been the driving force behind Bitcoin’s exponential rise recently. While their investing behavior might still be the dominant factor when it comes to price action in Bitcoin going forward, it might not be the only one. The expected future adoption has been thrown in the mix in a big way. As is evident, People are trying to get in before this expected adoption and they are buying in a market with very constrained supply, so prices continue to climb.
Keeping this in mind, the latest in Chainalysis Market Intel analyses the investment behavior of the bigger investors, the so-called whales in the last few months leading up to Tesla’s investment. For the research, is assumed that Tesla acquired BTC at the average January price between the 4th and 29th — the latter being the day after which Elon Musk added #bitcoin to his Twitter bio.
Figure 1
As said before, Tesla is a huge addition to the Bitcoin institutional investors list, but it is not the only one. In fact, new large investors have acquired 1 million bitcoins from November to January — as shown by the orange line in the chart above (Figure 1). The line signifies large investors’ wallets that hold at least 1k bitcoin, that retain at least 75% of the bitcoin they receive. Also evident from the chart, this category of investors has flattened in January.
The price was driven up by the New large investors, holding bitcoin for less than 3 months, significantly increased their holdings, by 1 million bitcoin. Holdings of some medium-term investors, who have held BTC for 3 to 12 months and 1 to 2 years seem to have cashed out — shown above as yellow & pink line respectively. However, the holding of longer-term investors (2–4 years & 4 years+) have stayed steady over the last six months. These are true Hodlers!
Figure 2
Whales are wallets that hold at least 1k bitcoin and that are not controlled by exchanges or other services. The chart above (Figure 2) shows that these Whales received record amounts of bitcoin as the price of the premier digital asset peaked. This could suggest that there were some big buyers in the market in early January, including Tesla, which pushed Bitcoin to new highs.
The last two weeks of January saw a price decline which coincides with a drop in the whales receiving bitcoin in their wallets. There is also the possibility that Tesla bought BTC in late January and provided demand as other whales stopped buying. Either way, Bitcoin prices remain well-supported.
Figure 3
And finally, the chart above (Figure 3) shows that since November, 72% of the bitcoin received by whales was ultimately sourced from exchanges where bitcoin is traded for fiat. These are crypto exchanges with large USD markets. The minority sources (orange) are exchanges where Bitcoin is exchanged for other cryptos, primarily stable coin Tether. This suggests that big investors are typically buying BTC with USD. Apparently, they feel there is better value in keeping their money in the top crypto rather than the reserve fiat currency.
As I had said in my previous piece Bitcoin’s skeptics are probably going to meet the same fate as we saw with the hedge funds losing billions in the recent stocks saga. My conviction of cryptos’ mainstream adoption gets ever stronger with every passing day.
Originally Published on Medium
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