Key Points
- Large investors have been accumulating Bitcoin despite recent price correction and market volatility.
- However, the number of BTC wallets with a non-zero balance is declining, indicating small traders exiting the market.
Big investors have been actively accumulating Bitcoin (BTC) despite the coin’s recent price correction after reaching a new all-time high of $69,170 on 5th March. This observation was made by Santiment.
According to the on-chain data provider, the count of large holder addresses, also known as whales and sharks accounts, has rallied in the past week. For instance, the count of addresses holding between 100 and 1000 BTC has increased by 1% in the past nine days.
Increased Whale and Shark Participation
Similarly, the number of addresses holding between 10,000 and 100,000 BTC has surged by 4% during the same period. Despite this increased participation from whales and sharks, the number of BTC wallets with a non-zero balance is on a decline.
A non-zero wallet is an address that holds even a tiny amount of a specific cryptocurrency. Santiment attributes the decline in BTC’s non-zero wallets to small traders capitulating, suggesting that retail BTC traders are exiting the market due to various reasons such as profit-taking, loss-cutting, or simply a lack of confidence in the coin’s short-term prospects.
Exit of Small Traders
The recent spike in BTC’s price had resulted in an increase in the number of short-term investors holding the leading coin. This trend put BTC at risk of decline because a large amount of its supply is controlled by this investor cohort, which comprises traders who are ready to sell their coins for gains at any slight change in market sentiment.
The decline in BTC’s futures open interest in the past few days confirmed the exit of these investors. BTC’s open interest has declined by 3% since 5th March. When an asset’s open interest falls in this manner, it suggests that traders are exiting their positions without opening new ones, and liquidity inflow into the market is witnessing a general decline.
However, Santiment points out that despite the decline in non-zero Bitcoin wallets and the market volatility, the active participation of sharks and whales suggests a bullish outlook. This indicates that despite short-term fluctuations in BTC’s value and small traders “dumping” the coin for profit, there is still strong support from its larger holders.
