Despite a recent increase seen in the number of bitcoin (BTC) “whales,” much of this may be a result of already large holders taking their coins off exchanges, a new report from blockchain analytics firm Glassnode suggested.
“Much of the recent increase in the number of whales can be explained not by new money, but rather by existing wealthy entities withdrawing their BTC from exchanges,” they said.
The report thus reiterated an earlier finding by the same firm that BTC balances held on exchanges have been on the decrease throughout 2020, and especially since crypto’s Black Thursday on March 12. And according to the new report, the decrease in BTC balances held on exchanges coincides both with the off-exchange BTC balances held by whales, and by the overall number of whales.
The shift in balances from exchanges and to individual whales has pushed up what Glassnode refers to as the “whale dominance,” meaning the share of circulating bitcoins that are controlled by whales versus exchanges.
“We can see that this decrease in the balance of BTC on exchanges coincides with the increase in the number of bitcoin whales. It also correlates with the increase in whales’ BTC balance, which can be seen when we compare whale dominance to exchange dominance,” Glassnode wrote.
“These withdrawals [from exchanges] explain to a large degree how so many new whales could appear on-chain in such a short amount of time,” the report further said, while suggesting that this may also offer a clue as to why this shift is taking place.
“While there is no single explanation of what caused these large holders to withdraw their BTC from exchanges, … whales may have used Black Thursday as an opportunity to get in at the bottom and then withdraw their bitcoin to HODL for the longer term in anticipation of the next bull run,” Glassnode suggested.
At pixel time (16:07 UTC), BTC trades at USD 9,292 and is up by 1% in a day. The price is unchanged in a week and is down by 3% in a month.
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