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Bitcoin Whales Took Profits While Retail Investors Were Chasing Rallies

December 13, 2020 at 12:43 by Mark Stevenson

According to the latest research by OKEx, Bitcoin whales were fixing profits while retail traders were still trying to catch up with the Bitcoin (BTC) rally.

Experts from the OKEx team analyzed BTC/USDT trading patterns between August and November 2020 and found that retail traders were losing out to whales.

According to the study, analysts at OKEx decided to examine characteristics such as the size of trading positions and the direction of orders (buy or sell). Using these parameters, they tried to compare how different categories of market participants reacted to the Bitcoin bull run in August-November 2020.

As you can see in the table below, Bitcoin traders were divided into four groups based on their trading volumes.

Source: OKEx

According to OKEx experts, these categories generally correspond to the four types of participants in the crypto market — retail traders, professional traders, large players (whales), and institutional.

So what happened?

As per the data obtained in cooperation with the analytical blockchain company Kaiko, retail traders actively bought Bitcoin until the price reached rose to about $15,000. After that, retailers joined the buyers.

Until the end of November, Bitcoin purchases prevailed in the “less than 2 BTC” category. However, players who moved positions for amounts exceeding 2 BTC were more likely to act as sellers. The charts below illustrate this trend:

Source: OKEx

Source: OKEx

However, it is noteworthy that at the end of November, the holders of positions in the “2+ BTC” category again began to demonstrate interest in buying Bitcoin. These purchases came amid an aggressive market correction that began around Thanksgiving — when smaller traders were wary of returning to the market.

The report has its limitations

Moreover, the authors of the study acknowledged its certain limitations. For example, they emphasize that the results only cover transactions made on one trading platform in a relatively short period of time.

In addition, they do not take into account not only the statistics of other exchanges but also — more importantly — over-the-counter (OTC) data. Meanwhile, they represent an important segment of professional and institutional trading. It is worth remembering that it can sometimes take more than one day to execute OTC orders due to the fact that large orders can be split. This fragmentation also makes data collection difficult.

And finally, the whales themselves, too, are wary of over-aggravating the markets with excessively large transactions. Therefore, even when trading on exchanges, they often practice a similar breakdown of large amounts into smaller orders, so as not to confuse the current market dynamics.

If you have any questions and comments on Bitcoin today, use the form below to reply.

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