Bitcoin’s incredible rally to where it breached $20,000 and then more than doubled its worth from December 16, 2020, has brought in a lot of new blood and investment. However, many of these new investors would never have experienced the sting of Bitcoin volatility.
Now, the first pinch of a bitcoin correction has come and the price of the coin fell from a high of $41,000 to a low of $31,000, shedding almost 25 percent of its value. This major loss has not been felt since March of 2020, and thus will be entirely new to some investors.
In fact, it appears as if those not strong enough to face Bitcoin’s volatility may have already been pulling out. However, those with more experience are now in a position to profit and accumulate more coins.
Statistics governing wallet balances from Glassnode reveal that the main investors “buying the dip” are those with a balance in excess of 1,000 BTC ($36 million).
BTC millionaires know a good thing
The drop in price will have been damaging to many who hopped on the bandwagon late — but for those who are in the business of accumulation, this correction will serve as a time to again buy cheaper-than-market-value coins.
Elias Simos, protocol specialist at blockchain infrastructure provider Bison Trails, says the numbers suggest that the wealthy have been profiting from Bitcoin being sold by smaller investors throughout December and January.
“Addresses with more than 1k $BTC continue growing at the expense of all others–even as this most recent downturn is taking effect,” Simos summarized. While you were selling, whales were gobbling up your Bitcoin…”
There has been much talk of a Bitcoin supply crisis, and this latest move only ensures less liquid Bitcoin being out there.
“Don’t be part of the #BTC transfers to billionaires, corporations and hedge funds …. at least not yet,” entrepreneur Alistair Milne warned.
Institutions still wary
While the shaking out of weak hands seems to be mostly new investors, some of the new institutional investors appear to be only just finding their feet.
Guggenheim Partners, which announced a sizable fund allocation to BTC in late November, is allegedly planning to sell some of its holdings already. This comes after chief information officer Scott Minerd said that Bitcoin’s weekend drop provides the impetus to rethink the company’s position.
“Bitcoin’s parabolic rise is unsustainable in the near term,” he wrote. “Vulnerable to a setback. The target technical upside of $35,000 has been exceeded. Time to take some money off the table.”