- While the number of Bitcoins stored on cryptocurrency exchanges is gradually decreasing, the number of BTC whales continues to increase. Considering the aftermath of the halving and the institutions that buy large amounts of the asset, this could lead to a significant liquidity crisis.
While the number of Bitcoins stored on cryptocurrency exchanges is gradually decreasing, the number of BTC whales continues to increase. Considering the aftermath of the halving and the institutions that buy large amounts of the asset, this could lead to a significant liquidity crisis.
Data from the CryptoQuant monitoring source reports that the number of Bitcoins held on crypto exchanges has been steadily dropping for about a year.
The number of whales changes with the amount of Bitcoin held in stock exchanges
As the graph below shows, the amount of BTC held in exchanges’ wallets peaked at around three million during and after the liquidity crisis in mid-March 2020, when the asset’s price fell below $ 4,000.
When the cryptocurrency began to regain its lost value, many investors began withdrawing BTC assets from exchanges. This has led to numbers below 2.4 million held in commercial centers recently.
At the same time, Glassnode’s CTO highlighted the relationship between the price of BTC and the growing number of wallets holding at least 1,000 Bitcoins.
Glassnode’s chart shows that BTC whales gradually expanded their presence to over 2,000 such addresses over the same period. The price performed quite similarly, reaching new highs of over $ 40,000.
There’s a liquidity crisis at the door
Both of these metrics point to a topic that is gaining popularity within the cryptocurrency community: a liquidity crisis.
There is also another point of view that explores different metrics that suggest an ongoing liquidity crisis for cryptocurrency. Besides the whales, there are an estimated three million lost tokens.
Last year, we saw a large number of large companies and institutions entering the industry. MicroStrategy, the business intelligence giant of Michael Saylor, took the responsibility. The company, which is listed on the NASDAQ, has purchased over $ 1.1 billion of Bitcoins in total within a few months.
Jack Dorsey’s Square company followed suit with a $ 50 million acquisition. Insurance giant MassMutual, hedge funds One Asset River Management and Ruffer Investment, and Wall Street giant Guggenheim Partners also allocated a total of billions of dollars to BTC.
Grayscale, the largest digital asset manager, experienced tremendous growth in corporate clients that led to record-breaking results. As a result, these developments have reduced the liquidation of BTC.