Over the last month, the price of bitcoin has been in a decline. This comes after a fairly bullish month of January where prices of the digital asset returned to pre-FTX collapse levels. But while momentum has hit a roadblock, signaling that the sell-offs may be over, a decline in whale activity could mean that this is not the end of the downtrend.
Bitcoin Whale Numbers Fall To 2019 Levels
In early February, the number of Bitcoin whales, which are wallets holding more than 1,000 BTC, reached a new all-time high, according to data from Santiment. What followed was an impressive 70% rally for the digital asset which saw its price surge past $25,000 for the first time in six months.
This was not surprising as increased whale accumulations have also come with positive movements in price given that they take a significant portion of supply out of the market. However, with the number of whales holding 1,000 or more BTC declining, there could be more downside to come.
Santiment notes that this number slid to a new three-year low with a total of 378 wallets losing their whale status from the 2,489 all-time high figure recorded in February. There are currently only 2,011 wallets holding 1,000 BTC or more, down from its yearly highs of 2,266 wallets.
Will Whales Drag Down The Price?
The decline in the balances of bitcoin whale wallets could explain the current downtrend in the market. Usually, when investors reduce their holdings, it means they have sold them off, and with these large whales selling off millions of dollars worth of coins, it will certainly have an impact on the market.
It is also important to note that in 2019 when the figure was this low, bitcoin’s price also struggled tremendously. But it also presented an opportunity for investors to accumulate coins at low prices before the bull market resumed in 2019.
Additionally, the decline in the number of large BTC whales could also signal more decentralization in the network as coins circulate to smaller retail holders. So while it may end up being negative for the price of the digital asset in the short term, it carries more long-term positive implications.
The decrease in the number of whale wallets also shows that if the bitcoin bottom has not been established yet, it is close to being established ahead of the next halving in 2024.
At the time of writing, the price of bitcoin is trending at $23,404. It is down 1.49% in the last 24 hours with additional 3.62% losses on the seven-day chart.
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