In a revealing turn of events, previously dormant Bitcoin whales have begun actively trading following the recent spike in the cryptocurrency’s price.
Revived Bitcoin Whales Execute a Series of Transactions
According to a recent update by CryptoQuant community analyst Maartunn, multiple transactions involving aged Bitcoin tokens have been observed. The on-chain yardstick relevant to this scenario is the “Spent Output Age Bands” which monitors the transaction activities of various Bitcoin ‘age bands’. An age band classifies a time frame within which the coins were last moved on the Bitcoin network.
For instance, the age band that spans between 6 months to 12 months comprises tokens that were last involved in a transaction during this period. If these particular coins are included in a new transaction, there will be a sharp increase in the Spent Output Age Bands for this specific age band.
The analyst has shared a graph depicting the current trend of the indicator for the age bands ranging from 7 years to 10 years and 10+ years:
Both the above-mentioned groups have carried out transactions in the last day | Source: @JA_Maartun on X
As illustrated in the graph, the past 24 hours have seen a noticeable surge from each age band in the Spent Output Age Bands. This suggests that coins which have been idle for at least seven years have now reentered the market.
The transactions coincide with the recovery of the cryptocurrency’s value above $90,000, implying that these old whales possibly executed these trades to realize profits. If this is correct, it might indicate bearish sentiment for the digital asset, given the lengthy period of dormancy for these coins.
However, it’s crucial to consider that when tokens exceed seven years of age, they are more likely to be categorized as ‘lost’ due to misplaced keys, rather than ‘HODLed’. This hints at the possibility that investors who executed these recent transactions may have only just recovered the keys linked to their addresses. If these investors were holding onto their coins willingly so far, their decision to sell now could indicate a lack of faith in Bitcoin’s ability to appreciate further.
Interestingly, the age band which is more likely to consist of intentional HODLers ranges from 5 years to 7 years. It appears that the coins within this frame have also witnessed significant movement recently.
The shift in the Spent Output Age Bands for the 5 years to 7 years band | Source: @JA_Maartun on X
Current Status of Bitcoin Price
The decision by dormant whales to sell might not have been ill-placed because Bitcoin has already relinquished most of its gains from the rally and its price has dipped to $87,500.
The coin’s price has experienced a sharp drop in the last day | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
Frequently Asked Questions
What is a Bitcoin ‘whale’?
A Bitcoin ‘whale’ refers to an individual or entity that holds a significant amount of Bitcoins, giving them the potential to trigger large market movements.
What does ‘HODLing’ mean?
‘HODLing’ is a cryptocurrency term that originated from a misspelling of ‘hold’ and has evolved to mean ‘Hold On for Dear Life’. It signifies the practice of holding onto a cryptocurrency, regardless of market volatility, with the expectation of future profit.
What are ‘Spent Output Age Bands’?
‘Spent Output Age Bands’ is an on-chain indicator that tracks the transaction activity of various Bitcoin ‘age bands’. It is a useful tool for understanding the behaviour of Bitcoin holders over different periods.
What does it mean when a coin is ‘lost’?
A coin is considered ‘lost’ when the keys associated with the wallet holding the coins become misplaced, making the coins inaccessible.
Conclusion
The recent activity of dormant Bitcoin whales serves as a critical telltale of the dynamic Bitcoin market. It exemplifies that even after years of dormancy, significant market action can be triggered by such entities. However, it also underpins the decisiveness and speculative nature of investor behaviour in the face of market volatility. It further emphasizes the importance of on-chain indicators, such as the Spent Output Age Bands, in providing essential insights into market trends.
