Investors HODL While Bitcoin Looks Bullish

After some good days this week for Bitcoin, Tom Lee reaffirms his $25,000 prediction for Bitcoin yet again. Is he right after all about this prediction?

Remember that Bitcoin was doing bad and even had a lackluster performance even after Consensus 2018. One of the reasons for Tom Lee’s prediction is basically due to the possibility of traditional institutions such as banks to come into play and get involved in the lucrative business.

He also views the regulatory climate to play a major role in the cryptocurrency price. With Coinbase working with regulators recently, it seems that Tom Lee is on point with his prediction.

As for Robert Sluymer who also works at Fundstrat, he believes that Bitcoin is going to recover slowly. He mentioned that “We think Bitcoin is starting to bottom off some very key support around $7,000 and we think it’s going to start a recovery process here”.

Are There Really Whales Already Involved?

But one question that you should be asking is how involved are the “whales”? Around 1,600 investors hold around $37.5 billion worth of Bitcoin. To give you a perspective, that is around a third of the available Bitcoin. And this would easily give you an idea about the wealth of these investors.

According to the data shown by Chainanalysis, there were around 1,600 bitcoin wallets that contain at least 1,000 bitcoin each. That is around five million bitcoins stripped from circulation. According to Philip Gradwell who works as Chainanalysis’ chief economist, “This concentration of wealth means that bitcoin is at risk of volatility, as the moves of a small number of people will have a large effect (on the price)”.

Early Investors Cashing In

The Chainanalysis data also revealed that there were early investors who were able to cash their holdings just in time when speculators were already arriving in large volume. For instance, last November, the amount of Bitcoin owned by individuals who held their digital currency for more than a year was three times that of investors who traded more recently.

However, in April 2018, things are a bit different. There was around 6 million Bitcoin held by long-term investors compared to the 5.1 million Bitcoin held by short-term speculators. Longer-term holders were able to sell around $30 billion worth of Bitcoin to speculators from December to April.

Regulatory Updates Slows Down Its Volatility

If you will look at the trading volume of Bitcoin recently, you may say that it is a bit modest. One of the possible reasons for this is the regulatory updates. It is possible that there are those investors who are waiting for clarity. For instance, the comment of US SEC Chairman Jay Clayton saying that Bitcoin isn’t a security is a positive development for the crypto industry.

There are experts pointing towards technical analysis that there could be a potential breakout soon for Bitcoin. Jon Pearlstone who is a publisher for Cryptopatterns newsletter said that “Bitcoin has spent the last week hovering in the mid $7000s on unusually low volume as traders take a ‘wait and see’ attitude”.