New Bitcoin Whales Are Participating In Notable Profit-Taking

On-chain data shows the Bitcoin short-term holder whales have been taking significantly more profits than the diamond hands in this rally.

On-chain data shows the Bitcoin short-term holder whales have been taking significantly more profits than the diamond hands in this rally.

The cryptocurrency market has seen its fair share of volatility in recent times, with prices swinging wildly as investors react to various events. One way to analyze this activity is by looking at the profit (or loss) that traders realize when they sell their coins at a higher price than they bought them at.

Recently, both the short-term holders (STHs) and long-term holders (LTHs) have participated in some profit-taking, according to CryptoQuant author Axel Adler Jr..

STHs and LTHs are two broad divisions of the BTC network done on the basis of holding time, with the cutoff between them being 155 days. Similarly, ‘whales’ are also a classification of the asset’s investors, but in this case, the criterion is holding balance. More particularly, whales are defined as holders with more than 1,000 BTC. As such, the STH and LTH whales would refer to the big-money members of the STH and LTH groups, respectively.

Now, here is the chart shared by the analyst that shows the trend in the total amount of profit realized by these groups during the past few months:

As displayed in the above graph, both of the groups have participated in some degree of profit-taking. Still, clearly, the new whales who got into the market in the past five months have been the ones making up for the majority of this selling.

This trend is different from how it was in January, when the profit realization was more balanced across these cohorts.

Historically, the STHs have tended to be more sensitive to market events and react accordingly, while the LTHs have shown more resilience and tend to hold onto their coins for the long term. So, the whales falling to the temptation of profit-taking in the recent rally may not be too surprising.

That said, so far, the profit-selling in the market hasn’t yet reached the same highs as in January.

The whales represent a broad group that can be divided further into the regular-sized whales (1,000 to 10,000 BTC) and ‘mega’ whales (10,000+ BTC). According to data from the on-chain analytics firm Glassnode, the two groups haven’t been showing consistent behavior recently.

Here is a chart from the firm showing the Bitcoin Accumulation Trend Score for the two major whale cohorts over the past year:

As is visible in the above chart, the Bitcoin Accumulation Trend Score, an indicator that tells us about whether the investors are accumulating or distributing their coins, has been closely related to 1 for the whales recently, a sign that these large entities have been displaying strong accumulation.

The smaller cohorts have also been displaying a similar behavior, but the mega whales have diverged from the rest as they have taken to distribution instead.

BTC Price

At the time of writing, Bitcoin is trading at the $109,800 price point, showing a 6% gain over the last seven days.