The number of long-dormant Bitcoin wallets becoming active once again is rising according to a crypto research group. According to those compiling the data, this could pave the way for large price moves.
Other times during Bitcoin’s history where a large percentage or long-dormant wallets have “awakened” have corresponded with dramatic moves to the upside. However, since many of the wallets identified in the research hold massive amounts of Bitcoin, their owners could just as likely be preparing to sell.
Will Bitcoin’s Long-Term Whales Buy or Sell?
According to a report in Bloomberg citing analysis performed by the digital asset research group Flipside Crypto, many Bitcoin wallets that have long been inactive have reawakened. Based on past experience, this could mean that even greater price volatility could be on the way for the digital asset space.
Flipside Crypto claim that a sizeable number of Bitcoin holders who had not accessed their wallets for a period of between six months and over 2.5 years have been moving coins of late. The researchers state that the trend started in October of last year.
Since 2019 began, this trend has become more pronounced meaning that today around 60% of the entire circulating supply of Bitcoin is now being held in wallets that have been active in the last month.
Eric Stone, one of Flipside Crypto’s research team, stated in an interview cited by Bloomberg:
“It’s definitely a big shift… There’s more potential than usual for price swings.”
Stone also stated that the supply of active Bitcoins has shot up by a huge 40% since summer 2018. The researcher also identified that the historical examples of similar wallet activity had corresponded with large shifts in the price of Bitcoin. He cited examples from both 2015 and 2017. The latter immediately preceding the parabolic rise to around $20,000 Bitcoin experienced in the closing weeks of 2017.
Owing to the current distribution of Bitcoin, these wallets awakening could once again have a dramatic impact on the Bitcoin price. This is because the owners of the wallets in question hold vast percentages of the circulating supply of the digital currency.
It is stated that just 1,000 addresses hold over four fifths of all Bitcoin that has already been mined. Many of these wallets stayed dormant during the rise and fall of Bitcoin prices over the last two years. However, Flipside Crypto’s research claims that they are once again active meaning their owners could be preparing to add to or decrease their positions in the market.
Stone commented:
“The fact that those wallets have been recently active leads us to believe they could soon be active again… Put another way: We have no reason to expect them to remain stagnant for another 2-plus years.”
Of course, the multi-billion-dollar question is why have these wallets suddenly become active after all this time, particularly given the Bitcoin price action of the last 24 months. Whereas Stone and the other Flipside Crypto researchers did state that activity by these so-called “whales” had previously preceded bullish market activity, there is nothing to suggest that this will be the case once again.
Unfortunately, since the owners of many of these wallets are anonymous, there is no way to tell their future intentions. Whether they will be buyers or sellers remains unclear for now, at least.
Related Reading: Chainalysis: Up to 3.79 Million Bitcoins May Be Lost Forever
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