One of the most promising trends that Bitcoin has witnessed was its corporate balance sheet acquisition, with MicroStrategy at the tip of the spear. But the latest market movement proved to be the biggest and the most damaging correction that Bitcoin sustained in its lifetime.
The crypto-asset lost $200 Billion in just 24-hours following panic among the retail traders.
Bitcoin Accumulation Wallets Hit Reversal
Leading up to this event was the peculiar activity from the large wallet holders who were found to have been shuffling supply. As noted by the blockchain intelligence firm, Glassnode, wallets with 1k to 10k Bitcoin holdings appeared to be ‘reducing holdings’.
This is in a clear reversal in the accumulation trend by these high-profile wallets which had been in accumulation throughout 2020. But this class of BTC holders saw a perfect inverse in 2021.
According to the weekly report by Glassnode, Whales saw a supply increase in January of around +80k BTC and a subsequent decrease in the supply of -140k BTC in February.
It is important to note how the supply changes for the 100 to 1k BTC class [purple] and1k to 10k BTC,[(green] is mirrored in volume and shape.
Upon closer inspection, it was found that when one class saw an increasing volume, the other saw a decreasing volume and vice-versa. Hence, large vertical changes in charts like this often represent that a few large entities [example: exchanges, whales, or miners] making internal transactions.
The latest wallet behaviour could, in fact, signify that a sizeable portion of these coins may not be sold, but instead being restructured in custodial wallets. Along the same line, Glassnode noted,
“There was a preference for 1k to 10k wallets in January that are now transitioning into larger sets of UTXOs with smaller denominations between 100 and 1k. Perhaps coins are being placed into multi-signature schemes or custodians are undertaking internal shuffling to meet client requirements.”
Furthermore, the balance held by accumulation addresses continued to remain in a steadily upward direction which suggested long-term ‘HODLer heuristics’. The fact that these wallets saw no spends further validated the above argument.
That being said, while it is no secret that these Bitcoins are on the move and larger balances are being reclassified, it, however, does not necessarily demonstrate an end to, as Glassnode said, “whale spawning season”.