Everyone is noticing the financial instrument meltdown, and cryptos are once again the fastest falling asset class among others."I Told You So" to "It Is The Bottomest Bottom" posts are abounding on social media. What are the fishes of the Crypto Tank doing? Glassnode shares an interesting report.
But before that, I hope everyone knows about the Crypto Tank. If not, this infographic will tell you about it.
The Wallet activity Glassnode chartBitcoin: Accumulation Trend Score by Cohort bunches the wallets into cohorts of BTC holding wallets-aka Shrimps ( 1 BTC per wallet), Crabs (1-10 BTC per wallet), Octopuses & Fishes (10-100 BTC per wallet), Dolphins & Sharks (100-1000 BTC per wallet), Whales & Humpbacks (1k-10k BTC per wallet) and over 10k BTC per wallet holders. Thereafter, it goes on tracking the wallet activity at different price points of BTC over time. Accumulation (deep blue colour, score 1) would represent the ratio of change in wallet holdings to total previous holdings—basically meaning the wallets are buying more and more—while dilution (deep red colour, score 0) would essentially mean the same ratio nears zero—indicating liquidation of holdings from the assets.
This chart shows the wallet activity in the most recent crashes of the Bitcoin prices—Zone A refers to the LUNA induced crash from $40k-$30k in May 2022; Zone B refers to the post LUNA choppy zone of price activity from $25k-$30k and the latest meltdown to the lower twenties of Monday Mayhem.
If we look at the activities in Zone A, we can see that almost all of the cohorts were liquidating as the Zone A began, led by the Whales and Humpbacks, but as the prices moved towards $30k and below, the Whales and Humpbacks, along with the shrimp and crabs, quickly turned blue. Shrimps led the accumulation to deep blue through Zone B, while whales and humpbacks followed. The latest sell off witnessed deep liquidation in the 10-100 BTC wallets which went back to accumulating during Feb-Mar 2022 while the prices remained around $40k levels.
This clearly indicates that as the middle tier of BTC investors are throwing in the towels, the bottommost layer is gradually accumulating. The quick rally to over $60k in November 2021 sparked a lot of crypto interest, and many must have missed the bus. It could be these people, slowly moving in while exercising caution. Also, the top tier does represent a lot of institutional activities—so, we can also assume that the whales, humpbacks, and even bigger fishes of the crypto tank, mainly miners and exchanges, are picking up the cheaper BTCs after participating in the Zone A dumping on May 22.
This study does provide various investors some action points, and No-Coiners can surely start picking up some BTCs at these prices to become shrimp. Any systemic way of buying in, like either monthly accumulation of a certain amount or even weekly accumulation of a certain amount of Fiat converted into BTC or other cryptos, could really work well for people who want to get in now and wait for the underwater storms to create a Deja Vu in the Cryptoverse!
Ajoy Pathak is a Blockchain Evangelist with CryptoWire, a first port of call for entry into blockchain and cryptocurrencies. CryptoWire seeks to empower participants of the crypto universe with its super app and its research, training and information platforms like Crypto University, CryptoTV and CryptoWire.