Whales buy the dip, miners take risk-free approach, Btc millionaires shrink
The past six months have been tough for Bitcoin. The world’s largest cryptocurrency has fallen over 70% from its all-time high in November 2021 and is currently trading at $19,462. Its market capitalization has also shrunk, starting the year at $880 billion and slipping to $373 billion at the time of writing.
This drop in valuation has had widespread effects on the crypto market. For example, the number of Bitcoin millionaires has dropped significantly this year. According to data archiving tool, Wayback Machine, there were 90,902 Bitcoin millionaires as of January 5, 2022.
However, as of June 29, 2022, there were only 25,390 wallets containing over $1 million worth of Bitcoin. This represents a decline of around 72% in just six months. Things look even worse, considering there were 116,139 Bitcoin millionaires at the end of October 2021.
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However, as Bitcoin prices continue to test new lows, whales have taken the opportunity to embark on an accumulation frenzy. According to data from Glassnode, Spotted Whales (wallets containing >1,000 BTC) made significant additions to their Bitcoin wallets in June 2022. Current prices are in and around the December 2020 range, allowing Whales to invest low and lower their average purchase price.
Whales are the strongest players in the dismembered crypto market. They are market-hardened veterans who can weather the crypto storm by simply buying more Bitcoin. These large investors have been adding to their coin supply at an astonishing rate of 140,000 BTC per month and now control 8.69 million BTC in total. This represents 45.6% of the supply in circulation.
Whales are now very close to owning 50% of the global supply, and experts fear that will happen before the end of the crypto winter. This is not a good sign for investors as the whales will become the controllers of the market, influencing prices every step of the way.
Ironically, Crabs (wallets containing 0.1 to 10 BTC) and Shrimps (wallets containing up to 1 BTC) also picked up Bitcoin at every opportunity. Data from Glassnode indicates that crabs are buying Bitcoin at the fastest rate seen since 2017.
However, miners have a different story to tell. For them, rising energy costs and reduced profitability of mining operations have further complicated the matter. In June 2022, Glassnode shared the “Bitcoin Puel Multiple Chart”, which assesses the mining profitability of Bitcoin.
The chart showed profitability fell to its lowest level seen since November 2018, surpassing lows seen during COVID-19 and the Chinese crackdown on cryptocurrencies.
Additionally, falling Bitcoin prices have eroded the value of their hard-earned rewards, calling into question the sustainability of their business. The miners currently own around 65,200 BTC collectively. Fear of further price decapitation has led miners to offload around 3,000-4,000 BTC into the open market every month.
While experts and chart patterns can provide insight into where Bitcoin prices will go from here, no one can be sure. The only thing we can do is wait and watch.