New data from analytics firm Glassnode reveals that the majority of Bitcoin (BTC) whale buying and selling in 2023 is being driven by speculative investors. This contradicts the popular belief that institutional investors are the most active whales in the market.
Glassnode’s latest edition of its weekly newsletter, “The Week On-Chain,” highlights a shift in Bitcoin traders’ behavior since the price of BTC returned to $30,000. The data shows that short-term holders (STHs), defined as investors holding coins for a maximum of 155 days, have become much more prevalent among the whale investor cohort.
According to Glassnode, short-term holder dominance across exchange inflows has skyrocketed to 82%, well above the typical range of 55% to 65% observed over the last five years. This suggests that much of the recent trading activity in the 2023 market is driven by whales classified as STHs.
Interest in trading short-term moves on BTC/USD was already evident before May, especially after the FTX meltdown in late 2022. Speculators have become increasingly eager to take advantage of the market’s volatility. However, the results have been mixed, with realized profits and losses regularly spiking in line with price swings.
Glassnode highlights that newer investors, as evidenced by the degree of profit/loss realized by short-term holder volume flowing into exchanges, are trading based on local market conditions. Each rally and correction since the FTX fallout has seen a significant uptick in STH profit or loss.
In more recent times, whales have ramped up their activity on exchanges, accounting for 41% of total inflows at one point in July. This is indicative of their elevated influence on the supply and demand balance of BTC. Whale-to-exchange netflows have sustained an inflow bias of between 4.0k to 6.5k BTC per day throughout June and July, compared to the typical oscillation of ±5k BTC per day observed over the last five years.
It is worth noting that BTC sales are not solely driven by whales. Mining pool Poolin made headlines with its transactions destined for Binance, and miners potentially hedging profits have also contributed to sell-side activity.
These findings highlight the speculative nature of much of the Bitcoin trading activity in 2023. It appears that short-term holders, rather than institutional investors, are driving the majority of buying and selling. As always, it is important for individuals to conduct their own research and exercise caution when making investment decisions.