I got sent a report today that whales have been depositing coins at centralized exchanges at an increasing rate. This is usually interpreted as foreshadowing a potential sell-off as holders are ready to press the sell button. That doesn’t mean that the decision to sell has been taken, but gives the ability to execute quickly looks favourable to some.

So I looked into the data. Firstly this outlet had defined as wallets holding between 100 and 1,000 BTC. Glassnode, and others, generally define whales as holding over 1k BTC. Secondly, it was very hard to actually see how much BTC had been deposited. From their low fi graph (below), it seemed to be around 1.5k BTC. So I decided to cross-check this information.

Starting with Santiment I looked at Exchange Flow Balances and this backed up the story showing we've had net inflows in the last two days, totaling just under 3k BTC (this figure was total movement onto exchanges not just whales). However over the last couple of weeks overall, there have been net outflows.

I cross-checked that data with Glassnode, and they show that over the past few weeks there have been net whale withdrawals of 15.7k BTC.

Finally, I looked into the supply of BTC on exchanges as a % of the total supply and found that this currently sits at 8.7%. The lowest percentage in four years, the last time it was this low was in November 2018. In the past year the supply on exchanges, as a % of total supply, has dropped from around 12% to 8.7%.

So my conclusion is that yes there are some movements onto exchange, but at the moment it's not looking like that much and overall we've had Whale outflows over the past few weeks.

Looking at the halving events in BTC we can see that historically they have been after the lows for the cycle and seem to form a sort of stabilization point before the price rises dramatically. If we get a repeat of the past then at the next halving, scheduled for sometime between February 2024 and June 2024, the price would be around $40k and set up for another big bull run.

This is backed up by analyzing the short-term holder cost basis against the long-term holder cost basis which we discussed last week. The short-term holder cost basis, which is the average price that a short-term holder of Bitcoin bought for (those holding under 155 days). And the long-term cost basis, which is the average price that long-term holders of Bitcoin bought for (those who have held over 155 days). Now, the short-term holder cost basis dropped below the long-term holder costs basis for only the fourth time in history. In other words, those who are just entering have a better cost basis than those who have weathered months of volatility. This is a direct outcome of LTH capitulation, where coins purchased near the cycle top are sold and change hands at much lower prices.

This indicator has historically happened near the bottom of price cycles. Two weeks ago, the market entered this stage and compared to prior bears, has taken between 145-days and 339-days to recover. This lines up very nicely with the halving projections.

One last thing to note is the whale cost basis - what is the average price that whales bought for? This was done by price stamping the deposits and withdrawal volumes of the whale cohort (1k+ BTC) to/from exchanges and estimating the average price of Whale Deposits/Withdrawals since Jan-2017.

This currently sits at around $15.8k. So that might be a psychologically important price point if we drop further.