Newly released data from crypto exchange OKEx gives one possible explanation of how larger holders of bitcoin – or “whales” – were able to influence prices as bitcoin rallied to a new all-time high in November.
During that bitcoin run-up, institutions and whales were able to buy dips and oftentimes sell when prices went up. That left the majority of the retail investors scrambling to chase the rally, according to a newly released OKEx data report.
Trading data of the bitcoin/tether pair on OKEx’s platform between August and November showed that during the November bitcoin rally, whales’ such as individual investors with sizable holdings and, potentially, institutions were taking profits by selling their bitcoin. During that same month, smaller-sized traders, such as retail investors, continued buying as they did in September and October, despite higher prices in the oldest cryptocurrency, according to the report compiled by OKEx and blockchain data firm Kaiko.
Notably, during the end of November, as bitcoin’s price was approaching its new all-time high, a look at day-by-day trading activity of different groups of users on OKEx indicate that whales and institutions bought the Thanksgiving price dip, while retail and other smaller traders panic-sold their bitcoin during that small market crash on Nov. 26.
According to the report, the data indicated that while large bitcoin holders are “in the business of buying low and selling high,” they are not necessarily interested in buying bitcoin into rallies the way retail investors have been.
“Ultimately, [whales] seek to drive the market, shake out retail traders in panic and capitalize on opportunities to buy relatively cheap coins,” according to a the news release from OKEx. “For retail traders, and everyone else in between, the choice seems to be between two options: swimming with the tide or against it.”
A different take
Yet, data from another crypto analysis firm, CryptoQuant, has a slightly different take. Its view is that throughout 2020 bitcoin whales have almost never missed a “buy the dip” opportunity.
One CryptoQuant conclusion is the large-sized traders may have prevented bitcoin’s price from crashing further and instead drove each price rally, potentially making profits by selling bitcoin at higher prices.
New institutions turning whales into small fish
There appears to be two types of institutions in the crypto space in 2020: those crypto natives including crypto quant firms and family offices, and those who are from the traditional financial markets such as MicroStrategy or MassMutual.