These days institutional investors and the richest addresses in bitcoin profit when fear takes hold of retail users. Big holders are not discouraged and continue to accumulate coins when the price decreases, concludes CoinMetrics in its latest newsletter on the State of the Network .
In the report published yesterday January 26, the data provider of the cryptocurrency market analyzes how fear, uncertainty and doubt (FUD for its acronym in English), would have affected the fall in the price of bitcoin that occurred last week. At that time, the cryptocurrency fell by 17%, going from USD 40,000 to USD 31,400 per unit.
The collapse of the crypto asset coincided with the dissemination of various information that confused users and generated fear. “Some holders were scared and sold their shares,” says the report. User hysteria was sparked on January 20 when several media spread a wrong report of a double spend detected in bitcoin .
Subsequently, several experts in the ecosystem took action to clarify the matter and make things clear, but fear had already spread and the price of the cryptocurrency had plummeted.
Later, stories related to the transition of command in the presidency of the United States began to circulate. These pointed out that the incoming Secretary of the Treasury Department, Janet Yellen, had stated that cryptocurrencies were used mainly for illicit purposes and that it would be important to take action strong against cases of illegal use. “The claim is not only false, but also out of context,” adds the report.
What Yellen had really said was that she believes that “we have to study carefully how to promote the use for legitimate activities and at the same time restrict their use for malicious and illegal activities. It did not claim that most cryptoassets use cases are illegal, CoinMetrics adds.
Bitcoin whales feed on the fear of shrimp
Analysts at the data provider firm believe that the FUD was surely not the only element that influenced the bitcoin price drop last week. However, they did find enough elements to point out that the biggest holders of bitcoin (also called whales) may be taking advantage of the temporary fear spread in the market to accumulate more coins.
The data shows that despite the price drop, the number of addresses that have at least 1,000 BTC (more than $ 30 million) increased by 11%, from an approximate record of 2,200 addresses, to a total of 2,443. The figure indicates that the number of large BTC holders continued to rise as retailers shed their positions.
Well-known analyst Willy Woo also made reference to the increase in the number of addresses that own more bitcoin. In fact, he believes that it will soon be necessary to redefine the terms that have become popular to classify hodlers . He said, somewhat jokingly, that the ecosystem requires the collaboration of marine biologists to learn about the different types of shrimp that would allow addresses with less than 1 BTC to be classified. From his point of view, this will be necessary when the price of the cryptocurrency resumes its bullish boom, as he believes it will happen.
Woo added on Twitter that now when there are institutional investors who accumulate more BTC, perhaps it will be necessary to denominate as jackpots addresses that accumulate 10,000 bitcoins and sailors those that have 50,000 BTC .
The cryptocurrency market often uses marine species names to refer to addresses based on the amount of bitcoin they own. In that sense, it may soon be necessary to expand the number of species to accompany shrimp (less than 1 BTC), crabs (1 BTC), octopus (10), fish (50), dolphins (100), sharks (500 ), whales (1,000) and humpback whales (5,000), which has the pioneer cryptocurrency world.
Institutional investment advances without fear
The CoinMetrics report also contemplates that while the price of the first cryptocurrency fell, the money continued flowing in Grayscale Bitcoin Trust (GBTC) for the past week. For analysts this is a sign that the recent correction was not a noticeable event for institutional investors who see the BTC market attractive.
To confirm how institutional demand for cryptocurrency is growing, the bulletin highlights as positive the movement that occurred last week by BlackRock, the investment company with the most assets under its management in the world, which opened the door to bitcoin derivatives to its product offering .
As CriptoNoticias reported, BlackRock, which manages around $ 8.7 trillion, has changed its vision around bitcoin. He went from saying in 2017 that “Bitcoin just shows how much demand there is for money laundering in the world” to raising the possibility, in December 2020, that the cryptocurrency rivals the dollar as a reserve currency. However, this reassessment was not the effect of fear of being left out (FOMO) or without due diligence. Well, this same medium reported that, since July 2018, the New York firm has a team dedicated to investigating how to take advantage of the cryptoactive market.