According to traders, bitcoin whale watching is “good for social media” but not for insightful analysis. Traders claim that even if the measure has been used for some time to predict market mood, it will not produce “true alpha” if one follows the wallet movements of Bitcoin whales, or holders of the cryptocurrency with a larger stake than smaller investors.
Lead analyst James Check, also known as ‘Checkmatey’, of the onchain analysis company Glassnode remarked in a June 15 X post, ‘Don’t whale watch youngsters, it’s not useful information’. When I observe whales, I have never seen real alpha extracted. It’s useful for social media, but it’s rarely a serious or insightful critique,” he continued.
Crypto traders frequently hold the opinion that large Bitcoin holders, or “Bitcoin whales,” may manipulate the market with their trading strategies.
Whale movements can be interpreted in a variety of ways, thus even while they can have an impact, the data never offers a clear cut answer. For instance, big holdings in inactive addresses that suddenly become active may indicate selling, especially if the funds are deposited into an exchange deposit account. In an X post from June 15, pseudonymous cryptocurrency researcher TXMC, host of the YouTube channel Alpha Beta Soup, cautioned “against using “whale” metrics and making declarations about them.” They clarified that the sale of substantial quantities of Bitcoin by whales in a brief period of time does not necessarily signify a sell-off.
“Wallet management is addressed by this automated progressive drawdown, of which you are only viewing a portion. These are occasionally businesses and establishments with hundreds of thousands of customers and numerous wallets,” they asserted.
In a post from May 7, Check said, “I can almost guarantee that the big ‘whale’ wallets you’re watching are ETFs, and exchanges. Data around these entities is notoriously noisy.” He went on, “In my honest opinion, cheap engagement bait.” Posts on social media on whale movements typically spark a lot of curiosity.
Over 205,000 people viewed a recent post by anonymous cryptocurrency trader Marty Party that discussed Bitcoin whale activity. Marty Party wrote on June 14 that “Bitcoin OG whales have sold over 50,000 BTC in the past 10 days, totaling approximately $3.30 billion.”
When citing Bitcoin whale movements, analysts frequently include graphs that show how the activity has changed over time. Founder of Bitgrow Lab Viviek Sen posted an image taken from cryptocurrency analytical company CryptoQuant on June 14 along with the words, “While you are scared, whales just bought $1.3 billion worth of Bitcoin.” Still, other experts use whale movements as a barometer for market direction. After a two-month decline, CryptoQuant reported on May 15 that demand for Bitcoin whales is once more in “acceleration mode.” After declining since March, the growth in demand for bitcoin appears to be stabilising, the report stated. According to CryptoQuant, which quoted the statistics, additional acceleration of demand is required to maintain current price increase.