Bitcoin continues to confuse both bulls and bears alike, as it trades around the $64,800 level without giving any directional clues about where it might be headed next. However, network data received on Wednesday suggests that there could be a bearish undercurrent behind the bullish surface level data.
Bitcoin whales increase holdings but there’s a catch
Recently, BTC whales recorded one of the largest inflows into accumulation addresses. Notably, more than 38,000 BTC was deposited into wallets that are typically associated with long-term holders and over-the-counter settlement.
For the uninitiated, accumulation addresses are wallets that receive and hold a cryptocurrency, without showing significant selling activity, indicating a tendency to accumulate rather than distribute coins.
A slowly growing number of accumulation addresses is usually seen as a sign of increasing long-term investor confidence. However, it does not by itself guarantee future price gains.
While the slightly higher BTC inflow into accumulation addresses may look bullish at first – there is certainly a catch. When this data is put together with the realized price of accumulation addresses, a nuanced picture comes to the surface.
The average cost basis of these accumulation wallets is currently around $70,000, while Bitcoin is trading near $64,800. As a result, two possible scenarios could emerge.
First, the bullish scenario is that whales are accumulating aggressively in anticipation of a rally that could send BTC higher.
In contrast, the bearish scenario posits that some of this buying could be aimed at reducing their average entry price, allowing the whales to exit around their cost basis if Bitcoin revisits the $70,000 region.
In simple words, whale accumulation BTC today doesn’t automatically guarantee long-term holding. Rather, it could also represent strategic positioning ahead of a break-even exit.
BTC whales are unfazed
Despite the more than 50 percent price slump seen in BTC this year, whales continue to bolster their holdings. That said, an influx of some liquidity into BTC markets can definitely make things easier for both the whales and the bulls.
On Tuesday, BTC flashed a bullish signal as long-term holder supply fell significantly. While many are seeing the $70,000 level as a potentially bearish price level, a quick drop and return from the $60,000 level cannot be ruled out, which could actually be positive for the digital asset.
