“Don’t watch the whales, kids; this is not useful information,” wrote James Check, the lead analyst at on-chain analytics firm Glassnode, also known as “Checkmatey,” on June 15. “I have never seen real alpha extracted from watching whales. It’s good for social media, but it is not serious or valuable analysis at all,” he added.
There is a common belief among cryptocurrency traders that Bitcoin whales, who hold large amounts of Bitcoin, can significantly influence the market. While they can have an impact, whale movements can be interpreted in various ways and do not provide definitive indicators.
For instance, dormant addresses with large holdings that suddenly become active might suggest selling, especially if the funds are transferred to an exchange deposit address.
Crypto analyst TXMC, host of the YouTube channel Alpha Beta Soup, warned against using “whale” metrics and making assertions based on them. “When large quantities of Bitcoin are sold by whales in a short time, it doesn’t always indicate a massive sell-off,” they explained. “The gradual mechanical drawdown here speaks of portfolio management, and you’re only seeing a part of a larger pie. Sometimes these entities are companies and institutions with multiple wallets and hundreds/thousands of clients,” they asserted.
Check elaborated in a post, “The data around these entities is extremely noisy, and I can almost guarantee that the large ‘whale’ wallets you’re watching are ETFs and exchanges.” He added, “In my honest opinion, it’s cheap engagement bait.”
Social media posts covering whale movements tend to generate significant interest. A recent post by pseudonymous crypto trader “Marty Party” discussing Bitcoin whale activity garnered over 205,000 views. “Bitcoin OG whales have sold over 50,000 BTC in the last ten days, totaling nearly $3.30 billion,” the post read.
Analysts often use data to signal when whales have differing views on the market. They typically present charts to compare activity over time. On June 14, Vivek Sen, founder of Bitgrow Lab, shared a chart from CryptoQuant, stating, “While you’re scared, whales just bought $1.3 billion worth of Bitcoin.”
Read more Cryptocurrency Analyst Reports Massive Bitcoin Sell-off
However, other analysts continue to monitor whale movements to gauge market direction. On May 15, CryptoQuant noted that demand for Bitcoin had returned to “acceleration mode” after a two-month downtrend. “It seems Bitcoin demand growth is stabilizing after being in a decelerating trend since March,” they said, citing data that suggested demand would need to accelerate further to sustain the price rise.
Understanding the true impact of whale movements requires careful analysis and should not rely solely on superficial observations.
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