During the cryptocurrency market crash on August 5-6, whale transactions soared to their highest level since April. On these dates, there were 28,319 BTC transactions worth over $100,000 and 5,738 over $1 mln. Why did whales step up their activity during this period? What is the reason for this? What will be the consequences for the market from their actions?
This activity means that large investors were actively buying bitcoin during the market crash. This could imply the following:
- Large investors (whales) believe that the decline in the bitcoin price is temporary and that the flagship digital currency still has plenty of room to run. They are taking the opportunity to accumulate more coins at lower prices. In this case, the average purchase price will be lower for the total position (position averaging).
- There is confidence among large players in the long-term outlook for Bitcoin. They view this slump as an opportunity to strengthen their positions. Long-term investors have a horizon of over three years.
The consequences of this move may be as follows:
- Strong whale activity could send a signal to other investors about favorable conditions for entering the market.
- If large players can hold their positions, this may lead to a recovery in the bitcoin price in the medium term.
Overall, whale activity shows their confidence in the outlook for bitcoin, which may have a positive impact on the future development of the cryptocurrency market. Quite often, whales take advantage of inexperienced investors, so not all whales are going to sit out protracted slumps.