Published: March 9th, 2021
An on-chain analytics platform now reports that Bitcoin whales with more than 1,000 Bitcoins each can influence another rally. Data by Santiment indicate that the last time these whales held more than 43% of the Bitcoin available in supply, the currency attained a 54-week high. And, the coin depreciated soon after they dumped their holding to below 42%.
Data by Santiment, an on-chain analytics platform, indicates that Bitcoin whales with more than 1,000 coins now hold more than 42.5% of the virtual currency's existing supply. The haul now gives them the power to influence the next rally, especially if they take it past 43%.
According to the data, the last time these whales had about an equal portion of coins in supply was on February 8, the same day the coin shot to its 54-week high. Market analysts believe the holders might have fueled the cryptocurrency's rally to its price on February 22, an all-time high of $58,354.
These figures matter because the whales shored up the supply about two weeks before the coin rallied to its all-time high. A decrease in the supply that the whales had preceded the drop in the virtual currency's price.
The Santiment data indicate that if the whales gather more than 43% of the available supply once again, they are probably looking to inspire another rally. Analysts said that the number of holders decreased just before the coin hit its record high and during the price correction.
According to these analysts, there is overall some lead-up time to the direction of whale build-up and dumps. It is the reason why the timing is such a powerful leading indicator, the analysts added.
Santiment data is supported by other market aspects that have been observed over time. According to a crypto enthusiast and Bitcoin price analyst who goes by the Twitter handle @cryptounfolded, implied volatility often rises in bearish markets and declines when markets are bullish.
According to the Bitcoin analyst, the implied Bitcoin volatility has gone back to January levels, an indication that another sustained rally might be on the way.
The Santiment prediction came to pass a lot sooner than anticipated. On Tuesday, March 9, the crypto flirted with the $54,000 level during the mid-morning Singapore trading session.
In the process, the globe's first cryptocurrency hit a two-week high while its market capitalization shot past $1 trillion yet again. It is only the second time that the cryptocurrency's value has gone beyond $1 trillion. The first time Bitcoin achieved this feat was on February 19.
The cryptocurrency extended its gains, hitting a 24-hour high of $54,348.57 during the early afternoon Singapore trading time. The price represents about a 7% increase compared to the previous day. However, the coin has since pared off some of the recorded gains.
The coin now stands several thousand dollars below its all-time high of $58,332.36. However, market analysts readily admit that Bitcoin has seen an impressive rally. It is up more than 80% this year alone and about 570% up year-on-year.
The market now has to adopt a wait-and-see attitude to see if Santiment and @cryptounfolded are right on their money. Another rally would be interesting, especially with the worrying nature the stock and equity markets have adopted in the past few days.
Analysts attribute the current crypto market status to several factors, including inflow of substantial capital from institutional investors and mainstream corporations' purchases. Square, Tesla, and MicroStrategy are a few of the companies that have poured billions of dollars into the cryptocurrency environment by buying Bitcoin.
On Sunday, March 7, Meitu, a Chinese app maker, announced that it had purchased $22 million worth of Bitcoin and Ether worth almost $18 million. Overall, the company invested $40 million in crypto.
The price of Ether has since risen to $1,836.73, nearly 7% up compared to the previous day, according to CoinDesk data.
The number of institutional investors making forays into the crypto sphere does not seem to stop. Recently, PayPal announced that it would buy Curv, a cryptocurrency security company, for less than $200 million.
The company was founded in 2008 to offer digital asset security technology services that it delivers as a cloud service. PayPal's acquisition is seen as a push by the giant online wallet company into the digital tokens realm.
Bitcoin evangelists have touted the coin as, among other things, digital gold. Enthusiasts prefer to look at the virtual currency as a hedge against inflation or a potential safe-haven asset that investors can use to pack their riches during economic and political turmoil.
Some of these crusaders have recently gone ahead to argue that the loose monetary policies imposed in the wake of the current health pandemic are eroding the value of fiat currencies. Such crusaders are against quantitative easing measures such as asset purchases.
They have argued that Bitcoin now offers a better investment alternative since asset purchases by central banks and other related unconventional monetary policies have gnawed into the value of fiat.
Aside from acting as an alternative investment, some companies use their investment in the nascent crypto sphere to communicate to their shareholders. Meitu said that its entry into the blockchain industry is a demonstration to investors that the company has a vision and the will to embrace technological innovation.
Besides, many investors see cryptocurrencies as diversification of holding cash. Crypto and the ample appreciation room that most of them have provides the right diversification avenue.
Data by an on-chain analytics company indicate that whales holding more than 1000 Bitcoin each have the power to initiate another rally. The data by Santiment is supported by analysis done by a crypto enthusiast known on Twitter as @cryptounfolded. The figures and analysis indicate that if the whales snatch more than 43% of the coins in supply, the cryptocurrency will experience another rally.