How Bitcoin’s whales and sharks can take advantage of ‘oversensitive’ retailers

• Bitcoin wallets holding more than 10 BTC have surged over the past few months
• As economic conditions become uncertain, some retailers are avoiding the market to leave behind just whales and sharks

Despite the market turbulence and volatility over the past month, Bitcoin [BTC] has seen some impressive resilience on the price charts. This can be evidenced by the fact that every single time BTC has depreciated, its buyers have pushed it closer to $96k once again.

However, the current state of the U.S economy is once again affecting crypto investors, especially retail traders, leading to potential further volatility. This, because retail traders are highly sensitive to news and other macroeconomic developments.

On the contrary, whales tend to behave differently and at times, view the dip as a good opportunity for accumulation.

Bitcoin whales and sharks benefit from retail’s fear

According to Santiment‘s latest analysis, whales and sharks are benefiting from retail traders’ fear of collapse. The retail crowd usually assumes that history repeats itself by comparing recent news to previous price performance under similar circumstances.

For example, in 2022, Bitcoin’s decline of over 50% was attributed to the Fed combating inflation and aggressively raising interest rates. Thus, retailers are naturally fearful of a major drop repeating itself because of recent inflation and the Fed’s failure to lower rates.

Retailers being oversensitive to inflation and interest rate hikes are allowing whales and sharks to scoop up coins with little market resistance.

Every time the price retraces on the charts, whales and sharks get back into the market and buy the dip as retailers avoid the market.

During the 2022 bear market, for instance, whales and sharks were behaving as retailers are currently behaving. Thus, in 2022, wallets with over 10 BTC reduced their holdings as interest rates rose.

However,  over the past 6 months, wallets holding over 10 BTC have behaved differently.

These wallets have seen exponential growth, despite uncertain economic conditions. This means that these holders are not sensitive to U.S inflation data or Fed rate cuts and expect Bitcoin markets to evolve independently.

Any impact on BTC?

Bitcoin wallets with over 10 BTC are now holding strong, despite current economic conditions. This is a sign that large holders are optimistic and expect markets to rebound.

This optimism can be evidenced by the fact that whale capital inflows have continually outpaced outflows over the past week.

As such, large holders inflows hit a high of 7.6k BTC and settled at 4.1k BTC, at press time. Thus, large holders’ netflows have remained positive over the past week, implying that large holders are buying more BTC than they are selling.

This capital inflows by large holders, including institutions, can be further validated by a declining fund flow ratio to exchanges.

In fact, the fund flow ratio dropped from 0.16 to 0.11 over the last 18 days. This implied that more coins have been moving to cold wallets as institutions accumulated steadily.

This healthy market structure can be confirmed by the rising scarcity of Bitcoin. For instance – Bitcoin’s stock-to-flow ratio spiked from 115.1 to 579.43 over the past week. Such a strong upswing means that less BTC is readily available to sell, compared to those moving to private wallets.

Simply put, while retail traders are taking a step back in the market, large holders are not. In fact, whales are overly active and anticipate the price to rebound soon. So, they are using this opportunity to scoop Bitcoin from weaker hands.

Therefore, if the prevailing sentiment among whales hold, Bitcoin could recover and reclaim the $99,600 level where it has faced multiple rejections. Conversely, if retailers continue to sell, BTC will continue to trade sideways until good news comes along to restore their confidence.