Large Entities’ Bitcoin Holdings Reach Highest Level Since July 2022: CryptoQuant Analysis
A recent analysis conducted by CryptoQuant, an on-chain intelligence platform, reveals that large entities have been accumulating Bitcoin (BTC) at an unprecedented rate. Their total BTC holdings have reached a level not seen since July 2022, indicating a strong demand for the digital asset.
The findings from CryptoQuant’s weekly crypto report show a significant increase in the BTC holdings of these large entities. In December 2022, their holdings stood at 3.694 million BTC, and as of now, it has grown to 3.964 million BTC. This accumulation by major investors is closely correlated with the rising price of BTC.
New Spot Bitcoin ETFs and Major Holders Driving Accumulation
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One of the main sources of this accumulation is the new spot Bitcoin exchange-traded funds (ETFs), excluding Grayscale’s GBTC. These ETFs currently hold around 300,000 BTC, making them a significant demand source for the leading cryptocurrency.
Although some large entities have been selling off their BTC holdings in substantial quantities recently, up to 300,000 BTC per day, the new ETFs and other major holders have absorbed these sell-offs.
In contrast to the accumulation by large entities, Bitcoin miners’ selling activity has remained low. According to CryptoQuant analysts, miners have been selling less than 100 BTC daily in recent weeks. This is in stark contrast to the levels observed in November and December 2022 when miners were selling 1,000 BTC or more per day.
“Miner selling activity has remained low as higher Bitcoin prices have somehow offset the sharp decline of transaction fees. Miner Profit/Loss Sustainability is now signaling miners are being fairly paid after they were extremely underpaid in early January (blue area), when the Bitcoin price declined to $38K,” CryptoQuant said.
Short-term Holders Selling as BTC Surpasses $50,000
On the other hand, short-term BTC holders, who are mainly traders, have started offloading their assets to lock in profits as Bitcoin surpassed the $50,000 mark. The unrealized profit margin for these traders has increased significantly, although it is still not at extreme levels.
The current unrealized profit margin stands at 22%, which historically has signaled a potential price correction of around 40%. When traders sell at a high-profit margin, it often triggers a decline in the market. Additionally, a price correction could be triggered if the unrealized profit margin falls below its 30-day moving average.
Furthermore, there are potential risks for BTC selling coming from short-term holders and derivative markets. The high funding rates in the derivative markets have made opening new long positions expensive, which could discourage buyers and lead to selling pressure.
Hot Take: Accumulation by Large Entities and Selling by Short-term Holders Shape Bitcoin’s Market Dynamics
The ongoing accumulation of Bitcoin by large entities highlights their confidence in the future of the digital asset. This accumulation trend has contributed to BTC’s recent price surge and reflects increasing demand for investment purposes.
However, the selling activity by short-term holders indicates that some traders are taking advantage of the high-profit margins and cashing out their positions. This selling pressure could potentially trigger a price correction in the near term.
Overall, the balance between accumulation by large entities and selling by short-term holders will continue to shape Bitcoin’s market dynamics. As an investor or enthusiast in the crypto space, it is crucial to monitor these trends and developments to make informed decisions.
