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Bitcoin whales and large holders have dumped 81,068 BTC over eight days, reducing their share of circulating supply to a nine-month low of 68.04% as Bitcoin’s price crashed 27% from near $90,000 to around $64,000, according to on-chain analytics firm Santiment.
At the same time, smaller “shrimp” wallets, those holding less than 0.1 BTC, have risen to a 20-month high, suggesting heightened activity among retail participants.
Market participants often watch the behaviour of large holders to gauge sentiment and future price direction. Whale selling has historically signalled caution or distribution ahead of deeper corrections.
Santiment analysts highlighted the contrast between institutional and retail behaviour in the current sell-off:
“This combination of key stakeholders selling and retail buying is what historically creates bear cycles.” Santiment, an on-chain analytics firm, said.
Industry traders say the divergence reflects a shift in expectations. While smaller holders are ‘buying the dip’, large holders appear to be reducing risk exposure or reallocating assets elsewhere.
This aligns with broader market sentiment gauges such as the Crypto Fear & Greed Index, which recently plunged to its lowest level since mid-2022, a period marked by significant structural stress in the crypto sector.
Several factors have contributed to the aggressive repositioning by large holders and heightened volatility:
Bitcoin broke below key support zones in late January and early February, encouraging profit-taking and triggering technical sell signals.
Data from multiple market sources shows BTC dipping under $70,000 and testing multi-month lows.
Equities and risk assets have been under pressure, with sell-offs in tech stocks amplifying risk-off sentiment across markets.
A Reuters report noted that Bitcoin’s slump contributed to a $2 trillion erosion in global crypto market value, with losses accelerating alongside broader market weakness.
Nomination of a new U.S. Federal Reserve chair perceived as hawkish on monetary policy has also dampened speculative appetite, especially in high-beta assets like cryptocurrencies.
One striking feature of the current environment is the rise in small wallet participation even as larger holders trim positions.
‘Shrimp wallets’ reaching multi-year highs indicates strong retail appetite for timing low price levels; however, analysts caution that retail buying is not always enough to reverse bearish trends dominated by whales.
This mirrors patterns seen in previous market cycles, where retail accumulation during prolonged sell-offs often precedes deeper corrections or extended sideways trading ranges.
Crypto veteran analysts point out that the distribution of supply from more established holders to smaller participants can reflect capitulation, a phase where late buyers absorb positions from experienced traders exiting.
Santiment’s analysis shows this dynamic and flags the current supply shift as a bearish structural signal, at least until large holders stop reducing positions and begin reaffirming commitment to long-term holding.
The latest on-chain data paints a complex picture: while smaller investors are actively buying Bitcoin at lower prices, the retreat of larger holders to a nine-month low in supply share signals caution in the market.
Coupled with weakening sentiment and macro headwinds, these developments pose fresh challenges for Bitcoin’s near-term outlook and show how shifts in holder composition can influence broader price dynamics.
