Over the past year, a significant capital redistribution has been observed in the Bitcoin ecosystem: large holders, known as whales, have sold approximately 500,000 BTC. These changes have substantially impacted the market structure, as retail investors are giving way to institutional players.
This is reported by Business • Media
Institutional Demand and New Bitcoin Holders
Demand for Bitcoin from exchange-traded funds (ETFs), large corporations, and asset managers has fully offset selling pressure. During the same year, these institutional entities acquired around 900,000 BTC, gaining control over 4.8 million coins from a total circulating supply of 20 million BTC.
According to Flipside Crypto, back in 2020, only 2% of wallets controlled 95% of Bitcoins. However, currently, nearly a quarter of the market is under institutional control. This dynamic makes Bitcoin more predictable and less volatile, as noted by experts.
“Bitcoin is likely to increasingly resemble dull dividend stocks over time. On average, it grows each year, but by less and less significance. It is becoming more like a ‘retirement’ asset.”
This is confirmed by the Deribit Volatility Index (DVOL), which is currently at 37.93 — close to its historical minimum.
Concentration Risks and Market Impact
In the experts’ report, it is noted that the expected annual price growth for Bitcoin is 10-20%, which is significantly lower than in previous periods, such as in 2017 when the asset rose by 1400%. At the same time, experts warn about the risks associated with such capital concentration. With consistently high demand and a fixed number of buyers, the market could be at risk of a sharp price collapse.
Historical data supports these concerns: an outflow of 2% in 2018 and 9% in 2022 led to a price drop of Bitcoin by 74% and 64% respectively. Meanwhile, experts emphasize that it is too early to draw definitive conclusions, as a significant portion of whale transactions occurs in over-the-counter markets, and some capital may have shifted to institutional instruments, including ETF shares.
Attention is also drawn to the decrease in the share of Bitcoin on exchanges to below 15% at the beginning of July — the lowest level since August 2018, according to Glassnode.
Increased demand under such a trend could signal a rise in the asset’s value. However, as noted in the report, if demand decreases, even a slight correction could trigger a massive sell-off.
A significant portion of the cryptocurrency community expressed concerns about the influence of institutional players even before the launch of spot Bitcoin ETFs. They believe that the strengthening role of large players contradicts the original idea of Satoshi Nakamoto.