Signals from recent market data indicate that large investors are actively buying Bitcoin, which seems to stem from a misunderstanding of the exchange's internal settlement.
On January 2, Julio Moreno, the research head of the analysis firm CryptoQuant, revealed that the on-chain signals were initially interpreted as purchases by 'whales', but were actually derived from exchange-related activities.
Bitcoin whale, reducing holdings due to negative capital inflow
He explained that, in reality, this increase in holdings occurred during the process of cryptocurrency exchanges bottoming out assets.
Exchanges consolidate digital wallets by moving funds that were spread across several small deposit addresses into fewer large cold wallets.
Such technical transfers can mimic the pattern of large investors buying bitcoins in bulk. Consequently, market analysis tools may detect false buy signals.
However, Moreno mentioned that after filtering out internal transfers within the exchanges, a bearish trend appears among actual large holders.
According to him, investors classified as 'whales' holding more than 1,000 bitcoins and medium-sized 'dolphins' exhibited a net selling trend throughout December.
The total balance held by this group of investors decreased from about 3.2 million bitcoins in December to below 2.9 million, then slightly rebounded to adjust at 3.1 million.
Additionally, medium-sized wallets holding between 100 and 1,000 bitcoins also saw a decrease in total holdings to 4.7 million BTC.
Notably, such a distributed selling movement aligns with the volatility period of asset prices. Bitcoin plummeted in December, falling from approximately $94,297 to $84,581 according to BeInCrypto data.
Meanwhile, separate data from on-chain intelligence firm Glassnode also supports the selling trend. As of the end of December, the monthly net capital flow into the Bitcoin network turned negative.
This reversal phenomenon ended a steady net inflow that began in late 2023 and lasted for two years.
At the same time, long-term holders also exceeded the speed of realizing losses that go beyond typical volatility periods, surpassing records set in early 2024.
The surge in realized losses suggests the spread of 'investor fatigue' and capitulation among the group of market participants traditionally considered the most resilient.