The Slowing of Whale Accumulation: How Will Bitcoin’s Mid-term Market Evolve?

Recent Bitcoin Whale Selling Indicates a Slowdown in Bitcoin ETF Accumulation in the US.
The expectation of a rate cut by the Federal Reserve in June has significantly decreased, and it is expected that the consolidation phase of Bitcoin will last longer.
In recent times, there has been a significant increase in the inflow of funds into the Bitcoin ecosystem, and there is a high probability of a breakthrough before and after the Bitcoin halving, followed by further adjustments.
According to on-chain data, there have been signs of Bitcoin whales selling off recently, while the accumulation of Bitcoin by the US Bitcoin ETF has slowed down.
Recent Bitcoin sales in the US have raised concerns in the market, although the volume is not large, it has sparked panic in the market. According to a report by Scopescan on April 7th, data shows that the US government has transferred more than 600 BTC (worth more than $40 million) to new addresses in the past three days after transferring BTC related to the Silk Road. According to Santiment data, the number of wallets holding 100 to 1,000 BTC (often referred to as “whales”) has remained relatively stable between 13,872 and 13,841 since March 24th. This stability indicates that these significant holders are not currently accumulating more Bitcoin.
Bitcoin ETF has been a major driving force in the market during this bull market, but recent data shows a slowdown in its trend. From the data, the inflow of funds into Bitcoin showed a continuous growth from January to mid-March. However, since mid-March, the inflow of funds into Bitcoin ETF has been declining. From March 18th to March 22nd, there was a continuous net outflow of funds from Bitcoin ETF. Although there is currently a net inflow of funds, the trend indicates a significant decrease in the net inflow of funds into Bitcoin ETF. Overall, there is significant selling pressure on Bitcoin, and the signs of continued accumulation of funds have weakened.
The impact of the US macroeconomic situation on Bitcoin: One of the reasons for the strong performance of various markets in March may be the signals of interest rate cuts from central banks. According to a survey by Bloomberg, all G10 central banks, except the Bank of Japan, are expected to cut interest rates in the next year. The developments of the past month have strengthened this prospect. For example, at the meeting on March 19th and 20th, Federal Reserve officials stated that despite the expected strong GDP growth and rising inflation, they plan to cut interest rates three times this year. Similarly, the Bank of England did not have any officials supporting rate hikes for the first time since September 2021, and the Swiss National Bank unexpectedly cut interest rates on March 21st.
On April 5th (Thursday), non-farm payrolls in the US increased by 303,000 in March, far exceeding the expected 200,000 and the previous value of 270,000, marking the largest increase since May last year. The rebalancing of the labor market is evident in quit data, job openings, surveys of employers and workers, and the continued gradual decline in wage growth. The Chicago Mercantile Exchange’s FedWatch Tool shows that the probability of the Federal Reserve’s first rate cut in June this year has fallen to around 50.8%, and the market is now pricing in a delay in the timing of the first rate cut by the Federal Reserve from July to September.
In Powell’s latest speech, he stated that the latest data did not substantially change the overall situation, which continues to show steady growth, a strong but rebalancing labor market, and inflation on a bumpy road towards the 2% target. We expect that it will not be appropriate to lower our policy interest rates until we have greater confidence that inflation will continue to decline to 2%. Considering the strength of the economy so far and the progress on inflation, we have time to let future data guide our policy decisions.
Bitwu.eth, a crypto influencer, expressed that the expectation of a rate cut by the Federal Reserve has dropped sharply, and the probability of the first rate cut in June falling below 50% raises doubts about Powell’s statement of “three rate cuts this year.” With the current large debt and interest rates, in order to prevent the economy from collapsing in an election year, the United States has only two options this year: either to meet market expectations and cut interest rates or to continue to expand debt. Otherwise, no matter who is left with this mess, it will be an epic disaster. But regardless of which option is chosen, it will further boost the bull market of gold and Bitcoin. If nothing unexpected happens, 2024 will be the transitional year from macro liquidity contraction to expansion, and it is very likely that interest rate cuts will officially begin in 2025, and a new round of hot money will flow in.
Overall, the expectation of a rate cut by the Federal Reserve in June has significantly decreased, and the market now tends to favor July or later, with some even suggesting that rate cuts will not happen until 2025. For Bitcoin, the market originally saw the rate cut by the Federal Reserve as a core driving factor for further price increases, as increased liquidity would make it easier to push up the price of Bitcoin. However, with the delay in the expectation of a rate cut by the Federal Reserve and considering the weakening signs of whale accumulation, it is expected that the consolidation phase of Bitcoin will last longer. In addition, geopolitical tensions have become an important factor affecting Bitcoin, such as the Russia-Ukraine conflict and the Israel-Palestine conflict, which have triggered price fluctuations in Bitcoin.
From a cyclical perspective, this round of the cycle is actually quite different, such as the Meme frenzy starting this round. However, Bitcoin still has some lessons to learn from its price trends.
From on-chain data, BTC has been in Phase 3 for about 4 months. In 2012-2013, BTC was in Phase 3 for about 7 months. In 2016-2017, BTC was in Phase 3 for about 11 months. In 2020, BTC was in Phase 3 for about 4.5 months.
In addition, current BTC on-chain veterans have distributed their chips to 40.6%. At previous bull market peaks, the lowest distribution by veterans was 10.4% or less. The black line in the chart represents the BTC price, and the bars represent the percentage of BTC that has not moved for more than 1 year, weighted by the total cost value of buying BTC in different age ranges to eliminate the problem of ancient whale chips accounting for a large proportion now.
In summary, from a technical chart perspective, Bitcoin is currently under pressure at the upper level and has temporarily surpassed short-term moving average indicators such as M5 and MA13. Considering the weakened inflow of funds into Bitcoin ETF and the possible delay in the timing of the rate cut by the Federal Reserve, Bitcoin is expected to maintain a volatile consolidation in the short term.
However, with the upcoming Bitcoin halving, there continues to be a steady inflow of funds into the Bitcoin ecosystem, especially in the recent week, where the inflow of funds has been relatively high. According to Defillama data, the Bitcoin ecosystem has seen an inflow of 66.58% in the past week. Several well-known projects in the Bitcoin ecosystem have also chosen to launch after the halving. For example, the Runes protocol announced that it will officially launch the RUNE protocol based on the UTXO model after the Bitcoin halving, and the BRC 20 protocol will also be upgraded at the time of Runes’ launch. Assets pledged by participants in Merlin’s Seal are expected to be unlocked in April. Muneeb Ali, co-founder of Stacks, has stated that the Stacks Nakamoto upgrade will be launched between April 15th and 29th. The B2 mainnet will be launched in April, and BounceBit plans to launch its mainnet on April 23rd and conduct an airdrop in May.
Overall, there are signs of short-term strength in Bitcoin, and it is expected to break through before and after the Bitcoin halving. From a medium-term perspective, with the selling pressure from Bitcoin whales, the slowdown in Bitcoin ETF inflows, and the delayed expectation of a rate cut by the Federal Reserve, Bitcoin is likely to undergo consolidation after a high before and after the halving.