The number of Bitcoin whales has fallen since Tesla bought $1.5 billion BTC - Is retail investor sentiment a scalping signal?

On February 8, 2021, when Tesla publicly purchased Bitcoin worth $1.5 billion, this move caused a stir in the global financial community. The reason was not only due to the large amount of money that Tesla spent on Bitcoin, but also because the endorsement of a well-known organization made many believe that Bitcoin is a safe asset. However, instead of promoting the accumulation of long-term whales, this event marked a major turning point in Bitcoin's journey. Since then, the number of wallets holding more than 1,000 BTC, which is often linked with large organizations or native whales, has gradually decreased.

The Unexpected Change and New Momentum from Bitcoin ETF

A notable single sign in this downtrend occurred when spot Bitcoin ETFs were approved in early 2024. This announcement led to a spike in the number of Bitcoin whale wallets in a short period, reflecting an increase in interest from large investors. However, this upward momentum did not last long. After the initial growth, the number of BTC wallets with a balance of over 1,000 BTC stabilized, and there was no sustainable growth despite Bitcoin continuing to gain widespread adoption and its value increasing.

This raises an important question: Is Tesla's involvement in Bitcoin merely a coincidence in timing, or does it truly mark a significant shift in how organizations and large investors approach and engage with the Bitcoin market? One possible answer could be that this change reflects the development of a more diverse investor base, with many organizations and individuals breaking down their assets into various addresses for security, privacy, or trading strategy purposes.

Source: Alphractal## Is retail sentiment a signal for speculation?

Although the Bitcoin market continues to grow and attract interest, the stagnation in the accumulation by whales has led to a quiet shift in the structure of large Bitcoin holders. Data from Santiment shows an interesting sentiment trend: retail sentiment, rather than traditional support and resistance levels, may become one of the most reliable swing trading signals in the crypto market.

In a recent report, Santiment analyzed Bitcoin price predictions shared on social platforms such as X, Reddit, Telegram, 4Chan, and BitcoinTalk. This data categorizes the predictions into two main sentiment groups: predictions that Bitcoin's price will fluctuate between 30,000 USD and 70,000 USD (green) and predictions that Bitcoin's price will reach between 120,000 USD and 160,000 USD (red).

Interestingly, in the past three months, the price of Bitcoin has never fallen below 70,000 USD, but it has also never exceeded the all-time high of 112,000 USD. Nevertheless, retail discussions frequently shift from one extreme to another — from panic selling to the goal of reaching sky-high prices. Experts from Santiment point out that when retail sentiment leans toward bearish forecasts or becomes overly optimistic, the market tends to move in the opposite direction.

Source: SantimentA notable example pointed out by Santiment during the period from June 4 to June 6, when Bitcoin fell to 101,000 USD. At that time, retail sentiment was confused and many investors predicted prices would fall further. However, while retail traders were fearful and panicked selling, whales began to accumulate Bitcoin, leading to a strong price recovery. This is clear evidence that trading against the crowd can yield stable profits.

Santiment emphasizes that monitoring retail sentiment, rather than solely focusing on traditional price indicators, can provide reliable trading signals. When retail traders begin to make extreme predictions, this could be a sign that the market will move in the opposite direction.

The change in the structure of Bitcoin holdings, along with the shift in retail investor sentiment, is creating new opportunities in the market. Data from Alphractal and Santiment shows that while the involvement of major institutions like Tesla does not necessarily lead to long-term growth for the market, they contribute to changing the structure of Bitcoin holders and how large investors participate in this market. In this context, monitoring sentiment trends and the movements of whales can provide valuable insights and trading opportunities for long-term investors and day traders.

Taylor