Ecoinometrics - The Bitcoin whales have no conviction

Bitcoin on-chain accumulation report, August 2023

The whales addresses play an important role when you are analyzing Bitcoin’s market sentiment from an on-chain perspective. 

Due to the size of their positions whales are often playing a game on two different time horizon:

• In the medium term they will trade in and out of the market in opportunistic ways.

• In the long term they still have the goal to accumulate as many coins as possible.

This month we focus on this medium term game and its distinctive lack of action.

Plus as a bonus we answer a subscriber question about the MVRV metric and its correlation to downside risk.

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The Ecoinometrics newsletter gives you insights from crypto and macro data to help you make better investment decisions. 

We spend hours every day gathering data, creating metrics and bringing them to life with data visualizations that allow you to quickly get to the heart of things.

We then distill all that knowledge in each issue of the newsletter with less words and more charts so that you get insights, direct to the point, in five minutes or less.

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P.S. Checkout our latest tracker of MicroStrategy Bitcoin holdings at https://www.ecoinometrics.com/microstrategy-bitcoin-holdings-with-charts/.

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Bitcoin on-chain accumulation report, August 2023

Bitcoin is open source, the blockchain is public, the network is permissionless. So there aren’t really insiders the same way there are insiders owning stocks of a public company. 

But the open nature of the blockchain allows you to track which addresses are accumulating and which addresses are distributing coins. Taken in aggregate this can be used as a way of gauging the sentiment that’s driving Bitcoin’s movements at the most fundamental level.

This is what we do every month in this report and that’s the closest you’ll get from understanding what the Bitcoin insiders are doing.

The takeaway

The three largest cohorts of Bitcoin addresses are:

• The addresses controlling 10 to 100 BTC.

• The addresses controlling 100 to 1k BTC.

• The addresses controlling 1k to 10k BTC.

In aggregate those three control about the same amount of coins and account in total for two third of the entire market.

When trying to figure whether or not the mood on-chain is turning bullish and supportive of Bitcoin’s price this is what we must look at.

But when we look at these groups over the last 90 days or even the less 30 days, the only conclusion is that there is a lack of clear trend:

• No clear trend means no conviction.

• No conviction means no price support.

• No price support means it is harder for BTC to build momentum.

It is that simple.

Now the good thing is that while those on-chain metrics aren’t particularly bullish, they aren’t bearish either. And the whales like BTC at $25k…

But let’s look at some chart to understand that in more details.

Breaking down the cohorts