Crypto news: a few days ago a report was published that clearly shows how whales are accumulating Bitcoin and Ethereum.
The news has been circulating for several days already, because the accumulation accelerated after the collapse of FTX.
In fact, after the closure of what was one of the largest centralized crypto exchanges in the world, many have preferred to withdraw their funds from centralized exchanges and move them to proprietary wallets.
This flow is evident from on-chain analysis of the public addresses on which more funds are held, and it has been going on for more than a month.
News: the report on Bitcoin and Ethereum whales
The “Bitfinex-Alpha-35” report was compiled by analysts at the crypto exchange Bitfinex, and it reveals that large whale-styled wallets have seen inflows of even more than 70,000 BTC in recent days, with more accumulating after prices bottomed on 10 November.
According to Bitfinex analysts, this indicates that whales are trying to gain strength without buying aggressively.
70,000 BTC corresponds at current prices to more than $1 billion, or an amount equal to nearly 0.4% of all Bitcoin in existence to date.
However, it is confirmed that a large part of these inflows come from withdrawals from exchanges. For example, $5 billion was withdrawn from Binance alone between 12 and 14 December.
This week’s Alpha report takes an in-depth look at on-chain activity and financial markets, and reveals that the slowdown in trading activity brings with it the risk of increased volatility as trading volume and liquidity decline.
In 2022 so far, the average number of daily active addresses for Bitcoin has been just over 920,000, sharply down from 1.1 million in 2021. Last year, however, was a truly anomalous year, with record trading volumes and transactions.
According to Bitfinex analysts, this decline in active addresses could also be due to a reduction in mining operations, since miner activity is what has to do with the most significant movements of BTC on-chain.
Then again, 2022 was a difficult year for Bitcoin miners, due to a real slump in profitability that fell to historic lows in recent years.
Regardless, 2022 saw the largest year-over-year percentage decline ever for Bitcoin and Ethereum held on centralized exchanges: nearly -20% for both. Indeed, November’s percentage drop was the third-largest monthly drop in BTC history, and the fifth-largest for ETH. Both are the largest monthly percentage declines since 2017.
Thus, the hemorrhage of funds from centralized exchanges has been substantial in 2022, particularly since the shutdown of FTX. It is therefore possible that most of the recent on-chain accumulation of BTC by whales is due to this very phenomenon.
The macro picture
Broadening the analysis to the macro-economic picture, the report points out that inflation began to decline last month, but with a very slow process that has not yet prompted the Fed to ease its restrictive monetary policy.
Bitfinex analysts assume another 50 basis point rate hike in February, and one of 25 basis points in March. This will bring interest rates to the expected peak of 5.25%, but still with risks of further hikes.
However, the Fed will not be able to keep rates that high for long, because there is a risk that the economy will begin to wither.
For crypto markets in general, volatility is high on average at the end of the year, due to low volumes and persistent sideways movements.
Moreover, the fact that whales are accumulating BTC on-chain is not seen as a bullish indicator, but rather as a crisis of confidence in large centralized exchanges.
The year 2022 will be remembered as the year when fears of a recession significantly influenced the macroclimate, and the year of a mighty bear market.
However in the crypto sector, despite the fact that industry giants such as FTX, BlockFi, Three Arrows Capital, Alameda Research, Celsius and others collapsed, there was a new wave of small investors and believers in cryptocurrencies who remained resilient and held their positions.
It was also the year that the City of Lugano made Bitcoin legal and initiated a movement that benefits its economy on numerous fronts. This specifically is being called a step forward for Bitcoin and cryptocurrencies, bringing greater adoption and understanding beyond mere speculation. Whether or not 2023 will be different remains to be seen.
