Smart money indicators and individual whale behaviors show that this type of trader is here to stay. There are no signs of smart money outflows, despite the market correction on August 5.
Smart money traders and whale buyers are here to stay, shows research by CryptoQuant. Smart money is linked to whale wallets that have survived previous correction cycles, or even deliberately traded the increased volatility. The presence of buyers, supported by a new inflow of stablecoins, helped the market recover to a higher range within 48 hours.
The immediate aftermath of the Bitcoin (BTC) correction caused whales to return and buy near the lows. Several large wallet holders increased their reserves during the crash, helping bring BTC back to the $57,000 range.
In the immediate aftermath of the market crash, whales bought back as much as 30K BTC. The recent market crash brought the prices back in the area of accumulation. Smart money is turning slightly bullish in the aftermath of the correction, while crowd sentiment is measuring more bearish.
Smart money investors mostly held through the correction, which resulted in a shakedown of mostly short-term holders. The 2024 cycle was bullish for the BTC narrative, at least until the recent drawdown, the first major correction of nearly 30%. During this cycle, BTC is still far from previous drawdowns of 70% to 90%, but the slide is still enough to make some holders sell on the spot market.
As a result, short-term holders capitulated, while derivative markets switched to negative funding rates, showing no demand for long positions. At the same time, BTC locked in wallets with over 1,000 coins is at a record high. The newly created whales joined a high tier of holders with much older wallets.
The most recent price drawdown was compared to previous corrections this year, suggesting deliberate action to make some holders sell at a lower price.
while the entire CT was panicking about whether it's actually over, large BTC holders have quietly scooped up around 30k BTC pic.twitter.com/LOBNbU6NzL
— Max (@efficiencymaxi) August 6, 2024
Corporate holders and whales return for BTC
BTC buyers often try to grab some of the diminishing scarce coins for long-term insurance, in the form of treasuries. MicroStrategy already holds about 1% of the BTC supply and is the third-biggest known corporate holder outside top ETFs.
Michael Saylor, the company’s CEO, recently announced a personal BTC reserve, estimated at about 0.1% of the BTC supply. Long-term holders are also mostly in the money, as they have accumulated during the years of stagnation. Recent on-chain analysis shows early whales and buyers are feeling much smaller pressure from unrealized losses. Short-term buyers from Q2 onward are the biggest holders of unrealized loss.
Semler Scientific is another potential whale that has the intention of holding for the long term, by building a dedicated corporate treasury of BTC.
Smart money buying cannot sway BTC quickly, and may add to a period of accumulation. As of August 7, data showed spot selling started with US trading hours. Whale buying still helped lift up the Crypto fear and greed index from a low of 17 points to a higher range of 29 points.
Smart wallets closely watched for altcoins, memes and DEX trades
On a smaller scale, smart money tracking is still key to finding gems among DEX tokens and newly launched memes. Smart money wallets are often tracked for short-term actions and to find a direction in the market. Recent short-term activities show several high-profile wallets took profits on NEIRO and other assets.
Altcoins and tokens do not show holding behaviors, since some whales transferred MKR and ONDO tokens to centralized exchanges.
Ethereum (ETH) is also closely watched for inflows or potential trades to copy from whale wallets. High-profile trader James Fickle bought $9M worth of ETH as part of similar strategies of buying near local lows. The known whale buyer now sits on a position of $426M worth of ETH.
High-profile ETH addresses also bought additional tokens during the crash of August 5. A total of five whale wallets bought more than 114K ETH. Even known hacker wallets made use of the volatility to buy the dip at the lower ETH price range under $2,200.
Cryptopolitan reporting by Hristina Vasileva
