The whales are currently causing selling pressure, but soon the shortage could drive the price up again.
Bitcoin large investors, the so-called „whales“, are currently selling parts of their assets to institutional investors, while the shortage of the crypto currency is becoming increasingly acute.
As data from several sources show, although more and more Bitcoin (BTC) is paid in on crypto stock exchanges and offered for sale, nevertheless the demand, in particular by institutional investors, is still clearly larger than the existing supply.
Institutions do not let up
According to data from the crypto-market researchers at Coin98, the Grayscale asset management company bought up twice as many Bitcoin in November alone as were newly produced by Miner (see graph).
Grayscale purchases in November 2020. source: Coin98/ Twitter
Together with Square and PayPal, the other two big companies that are buying up more and more Bitcoin, Grayscale creates an imbalance between supply and demand, the logical consequence of which is a price increase.
Grayscale does not let up in December either, most recently buying up 7,000 BTC in just 24 hours, bringing the investment firm’s assets under management to more than $10.5 billion on December 4.
Grayscale purchases in the last 6 months. Source: Bybit
At the same time Bitcoin could crack in this week the past record high and climb toward the psychologically important 20,000 US Dollar, at which however substantial selling pressure opened up.
Subsequently, the market-leading crypto currency could catch itself however again with 18.100 US Dollar and climb back on 19.000 US Dollar, however the 20.000 US Dollar mark remains further a large hurdle. Driving force for it is probably that the „Bitcoin whales“ and long-term investors have at present a good opportunity to book out their profits, since institutions such as Grayscale continue to buy.
Bitcoin price development. Source: TensorCharts
This thesis is confirmed by the fact that the whales in this week increasingly deposited Bitcoin back on crypto stock exchanges, when the course ran up to the 20,000 US Dollar mark. So while the resulting selling pressure initially keeps the current climb in check, Bitcoin assets are moving behind the scenes from the whales to institutions like Grayscale and their clients.
Bitcoin assets on crypto exchanges (red line).
Wealthy investors are causing shortages
Even the mass media have now become aware of this development.
„The number of addresses that buy more than $1 million in Bitcoin and then take it off crypto exchanges has grown by leaps and bounds,“ CNBC reported accordingly on Thursday.
„This is an increase of more than 180 % since 2017, and analysts conclude that more and more wealthy investors are buying Bitcoin and then holding it offline“.
The shortage of the market-leading crypto currency will thus continue if the bought-up Bitcoin is immediately removed from circulation. All the more probable that Bitcoin can continue the current high-altitude flight, as soon as the whales no longer sell and the institutions continue to maintain their demand.
Profitable Bitcoin addresses.
Meanwhile, the number of profitable Bitcoin addresses reached a new record high on Friday, as new data from Glassnode shows.
Wall Street also seems to have acquired a taste for it, with several indices for crypto-currencies to be listed on the American stock exchange from January 2021.