The Role of Shrimps and Whales Investors in Bitcoin Price
The shrimps of the crypto world have joined the whales in a glorious last stand to banish the bleak bitcoin winter.
These two contrasting groups are both HODLers - investors in bitcoin as a long-term proposition who refuse to sell their holdings - and they are determined to drive back the bears, despite their portfolios being deep in the red.
Shrimps, investors that hold less than 1 bitcoin, are collectively adding to their balance at a rate of 60,460 bitcoin per month, the most aggressive rate in history, according to an analysis by data firm Glassnode.
Whales, those with more than 1,000 bitcoin, were adding 140,000 coins per month, the highest rate since January 2021.
"The market is approaching a HODLer-led regime," Glassnode said in a note, referring to the cohort whose name emerged years ago from a trader misspelling "hold" on an online forum.
After bitcoin's worst month in 11 years in June, the decline appears to have abated as transaction demand seemed to be moving sideways, according to Glassnode, indicating a stagnation of new entrants and a probable retention of a base-load of users, ie HODLers.
Whales, those with more than 1,000 bitcoin, were adding 140,000 coins per month, the highest rate since January 2021.
"The market is approaching a HODLer-led regime," Glassnode said in a note, referring to the cohort whose name emerged years ago from a trader misspelling "hold" on an online forum.
After bitcoin's worst month in 11 years in June, the decline appears to have abated as transaction demand seemed to be moving sideways, according to Glassnode, indicating a stagnation of new entrants and a probable retention of a base-load of users, ie HODLers.
Like Neo, most HODLer portfolios are under water, yet many are refusing to bail.
Some 55% of U.S.-based crypto retail investors held their investments in response to the recent selloff, while around 16% of investors globally increased their crypto exposure in June, according a survey of retail investors by eToro.
- "Crypto is an asset class disproportionately held by younger investors who are more risk tolerant since they have, say, 30 more years to earn it all back," said Ben Laidler, eToro's global markets strategist.
MINERS' PAINS
Another class of staunch crypto HODLers - bitcoin miners - is increasingly under pressure as they face the double whammy of cratering prices and high electricity costs. The cost of mining a bitcoin is higher than the digital assets' price for some miners, Citi analyst Joseph Ayoub said.
The unfavorable environment for many of these miners, who have loans against their mining systems, has forced them to pull from their stash. read more
Core Scientific (CORZ.O) sold 7,202 bitcoin last month to pay for its mining rigs and fund operations, bringing its total holdings down to 1,959 bitcoin.
While Marathon Digital Holdings (MARA.O) said it had not sold any bitcoin since October 2020, the firm said it may sell a portion of its monthly production to cover costs.
The Valkyrie bitcoin miners ETF (WGMI.O) slumped 65% last quarter, outpacing bitcoin's 56% fall.
Lessons from the crypto winter in 2018 were that the miners who survived were the ones that kept producing even if they were under water. That approach is unlikely to work this time round though, said Chris Bae, CEO of Enhanced Digital Group, which designs hedging strategies for crypto miners.
For the bosses of mining firms', Bae added, the focus is now on the "need to think through the next crypto winter and have that game plan before it happens rather than during it."
Source : reuters
