Bitcoin has experienced some ups and downs in recent weeks, with the price hovering around the $27,000 mark. While it has seen some growth, the cryptocurrency has struggled to maintain sustained upward momentum. In order to understand whether Bitcoin can break through to higher levels, it is important to analyze the on-chain data. One particular indicator that could provide some insight is the percentage of stablecoin circulating supply held by whales, which has been on a downward trend lately.
In the past few months, the total supply of stablecoins held by large investors, known as whales, has been declining. This can be seen in the chart provided by Santiment, a leading on-chain analytics firm. The latest data shows that the metric has reached its lowest point since March 18th, indicating a significant decrease in the stablecoin supply held by whales.
To understand the significance of this indicator, it is important to consider why whales choose to hold stablecoins in the first place. These investors often hold stablecoins to mitigate the volatility associated with other cryptocurrencies like Bitcoin. When they deem the market conditions favorable, they exchange their stablecoins for volatile assets, thus exerting buying pressure on the market. Therefore, the stablecoin supply held by whales can serve as a measure of the potential buying power available for Bitcoin and other cryptocurrencies.
Whales, as entities that hold at least $5 million in their addresses, are among the most influential participants in the market. Their actions have the potential to significantly impact the price of Bitcoin. In the past, there have been clear patterns indicating that when whales significantly reduce their stablecoin supplies, BTC experiences an uptrend. This can be observed in the chart, where similar trends occurred prior to the January rally and the rebound in June.
However, in recent months, whales have been decreasing their supply of stablecoins. This, coupled with the decline in Bitcoin’s price, suggests that these withdrawals may be converted into fiat currencies. It is likely that the whales are waiting for the right market conditions to re-enter the volatile side of the market. Once they perceive the prices to be favorable, they will start buying Bitcoin again, which could trigger a sustained upward move.
In order for Bitcoin to observe an extended bullish momentum, it is crucial for the buying power of whales to return to the levels seen earlier this year when the cryptocurrency surpassed $30,000. This would indicate a strong belief and confidence in the asset, potentially triggering a sustained upward move. Until then, it is uncertain whether Bitcoin will be able to break through its current resistance levels and continue its journey towards new highs.
The decreasing trend in the stablecoin supply held by whales indicates a potential lack of buying power in the market. These large investors play a crucial role in driving Bitcoin’s price, and their actions often signal upcoming trends. While Bitcoin has experienced some growth, it has yet to break through to higher levels. The current scenario suggests that whales are waiting for the right market conditions before re-entering the market. Only when the buying power of whales returns to previous levels can Bitcoin hope to embark on a sustained upward move.