Bitcoin Shrimps Emerge as the New ‘Smart Money’ as Whales Offload Their Stash: Van Straten

As a seasoned crypto investor with a decade of experience under my belt, I’ve seen bull markets rise and bear markets fall. The current Bitcoin rally is no exception, and it’s fascinating to see who’s driving this train.

The data from Bitcoin’s (BTC) blockchain indicates that smaller wallets are persistently adding Bitcoin, while larger ones, often referred to as ‘whales’, seem to be following a ‘sell when it rises’ approach.

On Tuesday morning, Bitcoin, the most valuable cryptocurrency, came close to reaching $90,000 but later retreated, currently trading around $87,400. Despite this dip, it has shown a 27% increase over the past week as per CoinDesk’s data.

From my perspective as a crypto investor, taking a high-level look suggests that the recent surge in buying has primarily stemmed from the Nasdaq-listed Coinbase (COIN) exchange, often seen as a reflection of domestic institutional activity. However, upon closer examination, it’s evident that smaller wallets, or “shrimps” as they are sometimes called, are actively accumulating more coins, capitalizing on the current price surge.

Shrimps continue to be the smart money

According to Glassnode data, we can see the distribution of Bitcoin holders categorized as ‘shrimps’ who possess less than 1 BTC, and ‘humpback whales’ who have more than 10,000 BTC. A value close to one indicates that cohorts are amassing tokens, while a value near zero suggests a wider distribution of tokens among these categories.

Over the last two months, all groups except humpback whales have been amassing Bitcoin. This accumulation has mirrored Bitcoin’s rising price trend, as it soared from around $55,000 in September to nearly $90,000 in November.

The data challenges the narrative that whales are the smart money of the ecosystem. The feature image shows that whales have been selling into price strength, while retail has been buying the rally. CoinDesk research shows how retail has evolved into smart money over time.

Three months of supply outpacing issuance

Over the last 30 days, we’ve gathered data from various categories such as miners, exchanges, and individual investors (retail). The combined total of Bitcoin they have amassed is approximately 26,000 coins. Interestingly, this demand pattern has been steady for the past three months, starting from September. In fact, it’s been stronger than the supply and issuance rate during this period.

Long-term vs short-term holders

Long-term holders (LTHs), as identified by Glassnode, are individuals who have possessed Bitcoin for over 155 days. These investors often distribute Bitcoin when the price is robust, a pattern observed during past market peaks in 2017 and 2021. Additionally, they tend to accumulate Bitcoin at market bottoms.

Instead of letting go of their holdings now, it appears they’re maintaining them, indicating optimistic forecasts about the market. It might take significantly increased prices before long-term holders decide to sell their bitcoin.

At present, Large Token Holders (LTHs) control about 78% of the total bitcoin supply, which is approximately 15 million coins. In the last month, they’ve decreased their holdings by roughly 3%, a decrease that pales in comparison to reductions seen in 2017 and 2021, where LTHs reduced their supply by as much as 20%.

In simpler terms, individuals who own Bitcoin for short periods (less than 155 days) and typically purchase on highly enthusiastic days like Monday when Bitcoin surged by 10%, currently hold a minimal amount of the total supply. However, during past bull markets, these short-term holders have controlled up to 35% or even 50% of the overall supply.