It is a matter of curiosity what effect whales have on Bitcoin cycles. This post compares 2017 and 2023. Whales carry a significant amount of BTC. Let’s have a look at the details.
Bitcoin cycle of whales
cryptocoin.com As we mentioned above, the Bitcoin price rally in 2017 was largely driven by Ethereum. It was driven by the ICO craze and focus on altcoins at the time. However, institutions and large wallet investors have an impact on the price increase in 2023. On the other hand, in 2017, individual investors were at the forefront.
Profit rotation from altcoins caused Bitcoin prices to soar in 2017. On the other hand, DeFi-related assets come to the fore in 2023. Bitcoin (BTC) price cycles revolve around the halving event that happens every four years. The next BTC halving is likely to happen in early 2024. It is important to consider the differences between the 2015-2017 and 2020-2023 Bitcoin cycles. Accordingly, this helps investors set their expectations and prepare for a bull run.
Comparison of two BTC price cycles and whale activity
Bitcoin’s massive price surge in the 2015-2017 cycle set a record. But the 2020-2023 cycle, which brought BTC to an entire record high of $69,044, has different catalysts and players. Still, the two Bitcoin price cycles followed a similar trajectory. It started BTC with a bullish catalyst followed by capital rotation and heavy participation from key players in the ecosystem. However, these two cycles differ in the role played by individual and institutional investors, as well as the activities of large wallet investors, popularly known as whales, in the Bitcoin ecosystem. The 2015-2017 Bitcoin price cycle is considered one of the most iconic cycles. It is as follows:
- Initial Coin Offering (ICO) craze launched by Ethereum.
- Altcoins, shitcoins and everything in between.
- Return of capital to Bitcoin.
The rise of the Bitcoin price to $19,665 in mid-December 2017 was due to the intense participation of individual investors.
Bitcoin whales push BTC price to top of 2017 cycle
According to data from Santiment, there has been a consistent increase in the number of major wallet addresses holding more than 1,000 BTC. At the beginning of 2015, there were 13,903 addresses holding 100 to 1,000 Bitcoins, 1,438 addresses holding 1,000 to 10,000 BTC, and 90 wallets holding 10,000 to 100,000 Bitcoins. All three segments of major wallet investors in Bitcoin witnessed a consistent increase from 2015 to the top of the 2017 cycle, followed by a notable decline. Bitcoin price is represented by the green line.
As can be seen in the chart above, a large portion of retail investors had accumulated BTC at a discount before prices began to rise in the second half of 2017.
2015-2017 BTC cycle at a glance
In 2017, Bitcoin served as a gateway for market participants to jump into the Initial Coin Offering (ICO) frenzy. That’s why here investors have exchanged BTC for altcoins and popularly known shitcoins, currencies with no discernible purpose and low value. This has led to a huge increase in demand for Bitcoin. As a result, it acted as a catalyst for the price increase. The chart below presents Bitcoin’s dominance in perspective. Accordingly, this indicates a major decline after the 2017 bull run, at a time when altcoins gained importance and popularity. On the other hand, this gave the flagship cryptocurrency an advantage over the others, with capital shifting from altcoins to Bitcoin in the 2015-2017 cycle. However, this changed at the end of the cycle.
How is the 2020 to 2023 BTC cycle different?
The 2020 – 2023 BTC price cycle started in a similar fashion to previous cycles. In this case, the catalyst for the rise was Decentralized Finance or DeFi rather than the ICO craze. Accordingly, DeFi had $700 million locked in contracts at the beginning of 2020, up to $15 billion by the end of that year. It turned out to be the highlight of 2020. Compound has allowed investors to deposit crypto into lending pools that facilitate borrowing. That’s why he was one of the biggest DeFi players. Lenders earned interest on the assets they deposited. This fueled the DeFi craze that lasted all summer. Also, several similar protocols have emerged that offer this service to market participants.
A wave of food-themed DeFi tokens swept the market, mainly from SushiSwap (SUSHI), BurgerSwap (BURGER), Yam Finance (YAM), BakerySwap (BAKE), Pizza (PIZZA), Hotdog.Swap (HOTDOG) and Kimchi Finance (KIMCHI). Capital has turned from these assets to Bitcoin. After all, BTC’s rally in the first half of the cycle was also largely driven by individual investors. Later, MicroStrategy’s foray into Bitcoin ushered in an era of mass institutional participation in crypto. Accordingly, investment banks, funds and hedge funds have turned to Bitcoin as an opportunity to accumulate returns for their clients. Tesla’s $1.5 billion purchase of Bitcoin in 2021 contributed to the shift of traditional markets’ attention to the crypto ecosystem. Thus, there was a frenzy among big-capital investors and institutions. Ultimately, this led to a rally in Bitcoin price.
Whale operations
Whale transactions worth $1 million or more, shown in blue, have risen steadily throughout 2020. It peaked in early 2021 and in the third quarter of 2021. This indicates an increase in the participation of large wallet investors in the Bitcoin network in the 2020-2023 cycle. The number of whale transactions ($100,000 or more), represented by yellow bars, peaked in the months leading up to BTC peaking at $69,044.71 in November 2021. The chart below points to the role of whales in Bitcoin price cycles. It also looks at the critical role it played in the 2021 bull run.
Whales have emerged as one of the dominant catalysts in Bitcoin’s price cycles. As the BTC price hit an all-time high of $69,044.71 both segments of whale transactions climbed to the top, highlighting the importance of these participants in Bitcoin cycles. Therefore, based on data from the 2015-2017 and 2020-2023 cycles, the rising whale transaction count can be considered a sign of an impending BTC price rally. While Bitcoin price cycles do not repeat and the catalysts that initiate them may change, there seems to be one common factor that pushes the BTC price higher each time: Whales.
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