Bitcoin Prices Are Rising. But Whales Are Making Waves.
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Bitcoin got a boost on Thursday.
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Bitcoin
and other cryptocurrencies were rising on Thursday, rebounding off lows hit in a recent selloff. But data suggests major holders of the largest digital asset are jockeying to sell, which could bring short-term pressure to prices.
Bitcoin, the leading crypto, was up 3% over the past 24 hours to above $41,000. The price of bitcoin saw its biggest daily decline since February earlier this week and had slipped below $39,400 at points on Tuesday.
Citing on-chain data from Glassnode—which analyzes transactions on the blockchain, or the decentralized ledger that underpins cryptocurrencies—Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, said there was “some cause for concern.”
Sotiriou said that the number of wallets with a balance of more than 10,000 bitcoin, or around $410 million, has decreased substantially over the past week or so. Moving bitcoin out of a wallet can signal it has been shifted to an exchange or broker for sale.
Moreover, Sotiriou said, at least four major holders or “whales” have sold at least $400 million each worth of the digital asset. This could dilute short-term supply and add price pressure to bitcoin.
“This is an important metric to look at because whales typically have the power to control the direction of the market,” Sotiriou said.
“I am still optimistic for the crypto market in the short term due to reaching extreme fear and negative sentiment,” the analyst added, referring to the Crypto Fear and Greed Index, which measures sentiment between extreme selling and extreme buying. The index is suggesting what could be called “oversold” conditions, sitting at 28 out of 100, down from 34 last week.
The rest of the cryptocurrency space was following bitcoin’s gains. Smaller peer
ether
was nearly 2% higher to around $3,100. The token underpinning the Ethereum blockchain network topped $3,500 early last week but saw its biggest daily fall since January on Monday and dipped below $3,000 at points in recent days.
Smaller cryptocurrencies or “altcoins” exhibited similar price action, with
solana
rising 2%,
cardano
1.5% into the green, and
luna
ticking up 2.5%.
Memecoins—called that because they were initially intended as internet jokes rather than significant blockchain projects—exhibited much of the same.
Dogecoin
was 3% higher and
shiba inu
was just above flat.
Buoyancy in the digital asset space follows a rebound in the stock market on Wednesday, led by the technology sector and the tech-heavy
Nasdaq Composite
index, which surged 2%.
While cryptos should theoretically trade independently of mainstream financial markets, they have proved to be correlated with other risk-sensitive assets, like tech stocks.
Like tech stocks, digital assets have come under pressure in recent weeks from expectations that the Federal Reserve will move aggressively to tighten monetary policy against the backdrop of historically high inflation. Interest rate increases would raise the cost of borrowing, denting economic demand and dampening investor sentiment on riskier bets like cryptos.
Some analysts see the move higher among digital assets on Thursday as being a key test for bitcoin and its peers—because pressures from inflation and higher interest rates aren’t going away.
“Excitement has fallen in recent months, so this could be a critical test of the market from a psychological standpoint,” said Paul Robinson, an analyst at broker DailyFX.
“Typically once bitcoin gets rolling it doesn’t take long to muster a fresh level of market interest,” Robinson said. “If we were to see that fail to be the case this time around, then it could mean that bitcoin is headed for an extended period of sideways price action, or worse.”
Write to Jack Denton at jack.denton@dowjones.com
