21e6 Capital AG stated that crypto funds generally outperformed the price gains of BTC in previous bull runs, but ultimately suffered this year from having too much cash on hand and playing it safe.
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The historical price performance of Bitcoin confirms the notion that a hard limit on total supply combined with seamless global usability is key to becoming a store of value.
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Some non-whale Bitcoin (BTC) investors seem to have had zero issues with the cryptocurrency bear market as well as fear, uncertainty and doubt (FUD) around the fall of FTX, on-chain data suggests.Smaller retail investors have turned increasingly bullish on Bitcoin and started accumulating more BTC despite the ongoing market crisis, according to a report released by the blockchain intelligence platform Glassnode on Nov. 27.According to the data, there are at least two types of retail Bitcoin investors that have been accumulating the record amount of BTC following the collapse of FTX.The first type of investors — classified as shrimps — defines entities or investors that hold less than 1 Bitcoin, $16,500 at the time of writing, while the second type — crabs — are a category of addresses holding up to 10 BTC, $165,000 at the time of writing. “Shrimp” investors have reportedly added 96,200 BTC ($1,6 billion) to their portfolios following the FTX crash in early November, which is an “all-time high balance increase.” This type of investor collectively holds 1.21 million BTC, or $20 billion at the time of writing, which is equivalent to 6.3% of the current circulating supply of 19.2 million coins, according to Glassnode.In the meantime, “crabs” have bought about 191,600 BTC, or $3.1 billion, over the past 30 days, which is also a “convincing all-time-high,” the analysts said. According to the data, the new milestone has broken a previous high of BTC accumulation recorded by crabs in July 2022 at the peak of 126,000 BTC, or $2 billion, bought per month.Bitcoin net position change for addresses holding up to 10 BTC. Source: GlassnodeWhile crabs and shrimps have been accumulating record amounts of Bitcoin, large Bitcoin investors have been selling. According to Glassnode, Bitcoin whales have released about 6,500 BTC, or $107 million, to exchanges over the past month, which remains a very small portion of their total holdings of 6.3 million BTC, $104 billion.The behavior of shrimps and crabs seems to be interesting given the latest industry events, with Sam Bankman-Fried’s crypto exchange becoming a subject of a massive industry scandal involving alleged fraud and funds misappropriation.On the other hand, some big Bitcoin investors have claimed to keep being bullish on Bitcoin despite the ongoing crisis, with the government of El Salvador starting purchasing BTC on a daily basis, starting from Nov.17. Twitter CEO Elon Musk also expressed confidence that Bitcoin “will make it” despite the current industry issues, but there might be a “long crypto winter,” he said.Related: Exchange outflows hit historic highs as Bitcoin investors self-custodyIn the aftermath of the fall of FTX, Bitcoin immediately lost about $6,000 of its value, plummeting from around $21,000 below $16,000 in mid-November. The cryptocurrency has been slightly recovering over the past few weeks, edging up to no higher than $17,000.At the time of writing, BTC is trading at $16,500, or up around 1.7% over the past 24 hours, according to data from CoinGecko.
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First-time bear market? It’s also the first Bitcoin (BTC) bear market for Michael Saylor, one of the world’s biggest Bitcoin bulls. Executive chairman of one of the world’s largest pro-Bitcoin companies, Saylor took a moment out of his busy schedule at the Los Angeles Pacific Bitcoin conference to speak with Cointelegraph. Crucially, Saylor told Cointelegraph that when it comes to Bitcoin, “you have to take a long frame time perspective.” “If you’re buying [Bitcoin] and you’ve got less than a four-year time horizon, you’re just speculating in it. And once you’ve got more than a four-year time horizon, then the obvious thing is you dollar-cost average.”Dollar-cost averaging is a way of reducing exposure to the volatility of an investment. Saylor continued, “You buy the asset that you want to hold for a decade or longer, which is the long-term store of value.” At 130,000 BTC, MicroStrategy owns 0.62% of the total supply of Bitcoin, as the total Bitcoin mined is restricted to 21 million. MicroStrategy’s entry price is roughly $30,639 per BTC, meaning the technology group’s total investment is substantially underwater — were they to sell for dollars.Saylor (right) with Cointelegraph reporter Joe Hall.However, Saylor is nonplussed about the loss — on paper — of billions of dollars, stating, “Don’t get caught up and looking the price day to day, week to week.”Michael Saylor on stage at Pacific Bitcoin with Swan CEO Cory Klippsten (right). Source: YouTubeThe billionaire compares valuing Bitcoin to valuing a home. He joked that “if you bought a house and then every time you went to a party, you got drunk, and then at 11 pm or midnight, you walked up and said, ‘How much will you pay for my house? I want to sell you my entire house right now.’ Someone might say, ‘Well, I’m not really in the mood to buy a house. I’ll give you like half of what you paid for it,’ and then you’ll go home despondent, saying, ‘I lost all my money.’”Related: Bitcoin may need $1B more on-chain losses before new BTC price bottomAvoid that anxiety, he advised, and if you really do need the money in the next 12 months, it’s not investable capital; instead, Saylor explained, “It’s working capital.” “A logical model is if you live in Argentina, you’re holding pesos for a month or two, you’re holding dollars for a year or two. You’re holding Bitcoin for a decade or two. And when you think about it in those frequencies and time frames, it all starts to make sense.”Finally, as Saylor and Binance CEO Changpeng Zhao suggested, take custody of your Bitcoin. In light of another crypto exchange vanishing with customers’ funds, taking custody of Bitcoin is the only way of ensuring property that cannot be confiscated.
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The recent concerns related to the volatility of FTX Token (FTT) seeped into FTX CEO Sam Bankman-Fried’s other business operation, Alameda Research, as the BitDAO community requested information about Alameda’s BitDao (BIT) holding commitment.On Nov. 2, 2021, BitDAO swapped 100 million BIT tokens with Alameda in exchange for 3,362,315 FTT tokens with a public commitment to hold each other’s tokens for three years, so until Nov. 2, 2024. Given the rising uncertainties and speculations, the BitDAO community was quick to react to the sudden fall of BIT prices on Nov. 8, 2022, suspecting Alameda of dumping the BIT tokens and breaching the three-year mutual no-sale public commitment.BIT market price chart (1 day). Source: CoinMarketCapTo narrow down the reasons for BIT’s price drop, the BitDAO community requested an allowance for monitoring and verifying Alameda’s commitment to holding BIT tokens. BitDAO provided proof of honoring its side of the commitment by sharing an address that shows BitDAO Treasury holding all 3,362,315 FTT tokens.In return, the community gave Alameda a deadline of 24 hours to prove its commitment, requesting that:“The preferred method is for Alameda to transfer the 100 million $BIT tokens to an on-chain (non-exchange) address for the BitDAO community to verify, and hold until the end of the agreement.”Ben Zhou, the co-founder of crypto exchange Bybit, summed up the matter by stating that while nothing is confirmed, the BitDAO community wants to confirm proof of funds from Alameda.Standing up against the accusation, Caroline Ellison, the CEO at Alameda Research, confirmed no wrongdoing from the company’s end and promised to share the proof of funds, telling Zhou that:“Busy at the moment but that wasn’t us, will get you proof of funds when things calm down.”BitDAO’s proposal to request for Alameda’s funds proof was accompanied by vague warning:“If this request is not fulfilled, and if sufficient alternative proof or response is not provided, it will be up to the BitDAO community to decide (vote, or any other emergency action) how to deal with the $FTT in the BitDAO Treasury.”Alex Svanevik, the CEO of blockchain analytics platform Nansen, investigated the on-chain data to find that Mirana Ventures — Bybit’s venture capital arm — withdrew 100 million BIT from FTX. However, he advised the crypto community not to fall for speculations, as withdrawing funds doesn’t mean Alameda is selling.Related: Coinbase, Alameda-backed Mara launches African crypto wallet serviceFrom Nov. 6, numerous FTX users faced problems while withdrawing their funds from the exchanges, such as delays and failures.FTX addressed the concerns raised by investors by highlighting the smooth operation of the matching engine. However, the exchange agreed on delays with Bitcoin (BTC) withdrawals due to limited node throughput. In addition, users facing delays in stablecoin withdrawals were told that withdrawal speeds would get back to normal after banks resumed operations during the weekdays.
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There are dedicated solutions to track the actions of crypto whales. These solutions can provide analytics on whale actions and, in some instances, can also make investment/trading decisions for the user. Crypto traders and investors constantly track the amount of cryptocurrencies going in and out of exchanges. When a cryptocurrency like Bitcoin or Ether (ETH) is moved in large quantities into an exchange, it is expected to see some sell action resulting in a fall in price. Conversely, if cryptocurrencies flow out of exchanges into wallets, it is considered a precursor to a rise in price. This is because when exchanges have a high net outflow of cryptocurrencies, they have reduced supply resulting in an increase in price. Oftentimes, a whale could buy cryptocurrencies on an exchange and move them into their wallets in large volumes. This could result in a bullish price action for the crypto. In some scenarios, whales may choose not to disturb the markets by buying or selling on an exchange. They would do an over the counter (OTC) transaction between two wallets. For instance, they may send Bitcoin to a wallet that will send USD Coin (USDC) back, resulting in a sale of BTC without the market spotting the transaction. When the blockchain records a large transaction, investors can study the transaction and pick up the wallets involved in it. If the wallets hold large cryptocurrency positions, they can be labeled as crypto whale wallets. From then on, a regular check on these wallets and the transactions that are conducted can be insightful in assessing price movements of the crypto held in the wallet. Whale tracking can be equally beneficial in the NFT markets too. Most NFT communities have large holders of the collection. In many instances, these NFT holders are identified by the community. Tracking the behavior of wallets of these whales can help investors make quick buy/sell decisions. For instance, if a famous NFT collector or a whale sweeps the floor of a nonfungible token collection, that can indicate high convictions. Followers of the NFT collection and the whale would notice that and purchase the nonfungible tokens. This behavior was noticed with Gary Vaynerchuk several times during the NFT bull market in 2021. However, it can be overwhelming and time–consuming to manually stay on top of whale action, even when it is just for one cryptocurrency or NFT collection. This is where whale tracking tools come into play.
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