Could a $5 Billion Bitcoin Whale Sale Have Triggered the Subsequent BTC Price Crash after the ETF Launch?
[TL; DR]
A crypto analyst, James Van Straten, said that the recent $9,000 drop in the price of Bitcoin was caused by a single whale that sold much bitcoin.
The whale who sold 100,000 BTC got a profit of over $100 million.
Satoshi Nakamoto, Brian Armstrong, Chris Larsen, Michael Saylor, Changpeng Zhao, The Winklevoss Twins, Barry Silbert, Jed McCaleb and Tim Draper are examples of the biggest bitcoin whales.
Introduction
Many factors affect the price of digital assets like cryptocurrencies but with varying magnitudes. However, supply and demand have the greatest impact on the value of crypto assets. As we know, when supply exceeds demand the price of the asset falls.
In the crypto sector the activity of whales may influence the price of crypto assets. In this analysis, we uate whether or not the recent large bitcoin sell-off led to the BTC price crash. We will also assess the possibility of more major bitcoin sales.
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A Single Whale Could Have Caused Bitcoin’s Price to Crash by Over $9,000
A few days after the launch of bitcoin ETFs the price of bitcoin started falling towards the current price, $42,032. In fact, in the second week of January the BTC price dropped by over $9,000, which shocked the crypto sector, considering that the community expected a rise in its value as a result of the ETF approvals.
Bitcoin Price - Coingecko
As you can see on the diagram, there was a sharp Bitcoin price fall on 11 January. Some analysts said that the fall was a result of a cool off period after the SEC approved spot bitcoin ETF applications. In fact, the bitcoin price free fall which started on 12 January was attributed to the “sell the news” event associated with the approval of the crypto ETFs in the United States.
Read also: Crypto Whale Buys 3.43 T PEPE as Meme Coin Surge 70%
However, a new theory on the bitcoin price sudden crash has emerged. James Van Straten, a research and data analyst at CryptoSlate – a crypto insights firm – thinks that the recent sharp drop in BTC price was a result of a transaction by a BTC whale who purchased the asset in 2021,held it then sold during the second week of January 2024.
In a post on X, Straten, implicated a yet unknown bitcoin whale in the sudden plunge of the bitcoin price. In his research findings he said that one of the long term bitcoin holders, who acquired 100,000 BTC worth $4.8 billion during the 2021 bull run broke even at a price of $49,000 enabling him/her to sell his bitcoin holding.
Straten clarified his stance in a post on X . He said, “This is why (in my opinion) on Jan. 12, Bitcoin had its largest 1-day drawdown since the FTX collapse and tanked after the ETF started trading.”
He added, “I assumed it would have been held due to a 75% unrealized loss.” The size of the sell-off was so large that it triggered the one-day fall in the price of bitcoin. By standard, that was the largest plunge in the bitcoin price since the FTX collapse.
As the fact stands, the crypto whale remained resilient by holding a large quantity of bitcoin. More significantly, there were many falls and rises of the bitcoin price between 2021 and December 2023. At one time, the price of bitcoin fell to around $16,000 in 2023.
That crypto whale is likely to have netted over $100 million in profit after that historic BTC sale. The calculation to estimate the crypto whale’s profit is very simple. Taking into account the fact that the bitcoin holder had 100,000 BTC, a difference of $1,000 between the entry value and exit price leads to a $100 million in profit, which is a worthwhile financial benefit despite holding the asset for over 2 years.
Nonetheless, it is important to note that the whale’s sale was just a trigger of the price fall. Notably, after that sell-off the market experienced liquidations. Regarding this, Straten noted, “Then that sent the market into a frenzy, combined with liquidations, ‘sell the news,’ and record loss-taking.”
The Prospect of Continued Major BTC Sales
Van Straten believes that we may see further large BTC sales during 2024. More so, several of these sales may take place within the first quarter.
The participation of large institutional investors that have the power to sway the market sentiment and price shows that we are getting into a new crypto era. This also brings complexity and unpredictability into the industry.
In an X post, Kiarash Hossainpour, founder of Colorways Ventures, has indicated that during the first half of 2024 the market may have several large BTC sales which are likely to affect its price in a great way.
First, Hossainpour mentioned that Grayscale Bitcoin Trust (GBTC) may further reduce its holdings during that period. Already, after the launch of the spot bitcoin ETFs it has decreased its BTC holding from 621,000 BTC to below 580,000 BTC. Any other massive sale may push the bitcoin price further down. However, at the moment it is not yet clear if it aims to sell bitcoin again.
The other sell-off pressure may come from Mt Gox which aims to release more than 138,000 BTC, worth about $5.8 billion, to its creditors after a decade or so of insolvency proceedings. If it successfully distributes the bitcoin to the creditors that may result in massive sell-offs.
Further to this, the Celsius and FTX Insolvency proceedings may lead to a distribution of more than 38,000 BTC ($1.6 billion) and 20,500 BTC ($850 million), respectively. If some recipients who may become bitcoin whales convert them to cash that could lead to large sell-offs.
Also, some miners who are large bitcoin owners may sell their holdings during the course of the year. Nonetheless, if the value of bitcoin falls further that could give other crypto investors a chance to buy Bitcoin.
The Biggest Bitcoin Whales of all Times
As discussed earlier, if large bitcoin holders sell bitcoin its price may fall. Currently, there are dozens of bitcoin whales who may choose to dispose of their BTC holdings at any time.
examples of well-known bitcoin whales include Satoshi Nakamoto, the bitcoin blockchain founder, Brian Armstrong, Chris Larsen, Michael Saylor, Changpeng Zhao, The Winklevoss Twins, Barry Silbert, Jed McCaleb and Tim Draper. Most of these have large stakes in big crypto projects like cryptocurrency exchanges and leading blockchains.
Conclusion
James Van Straten said that a large bitcoin sell-off by a bitcoin whale led to the recent $9,000 price drop that occurred after the United States SEC’s approval of BTC ETFs. There is a high possibility of other major bitcoin sales since there are several large institutions like Celsius and Mt Gox that aim to distribute bitcoin to their creditors. Some of the recipients may sell bitcoin in large quantities.
FAQs about Bitcoin Whales
How much is the bitcoin whales?
The general understanding is that an individual, an organization or government that holds at least 10,000 BTC or bitcoin with a value of at least $100,000 is a crypto whale. There are many bitcoin whales on the market at the moment.
Are whales selling BTC?
Recently, bitcoin whales have been selling bitcoin since the start of January 2023. They usually sell their BTC holding at a point where they can make a profit or at least break even.
Who are the largest bitcoin holders?
Satoshi Nakamoto, Brian Armstrong, Chris Larsen, Michael Saylor, Changpeng Zhao, The Winklevoss Twins, Barry Silbert, Jed McCaleb and Tim Draper are a few examples of the largest bitcoin whales.
