Tracking the wallet movements of Bitcoin whales — a Bitcoin holder with a significant stake compared to smaller investors — will not lead to “true alpha,” according to traders, despite the metric used as a popular way to speculate on market sentiment for some time.
“Don’t whale watch kids, it’s not useful information,” onchain analysis firm Glassnode lead analyst James Check aka “Checkmatey” wrote in a June 15 X post.
“Not once have I seen true alpha extracted from whale watching. It’s good for social media, but is almost never serious nor valuable analysis,” he added.
It is a common belief among crypto traders that Bitcoin whales with substantial Bitcoin holdings are capable of influencing the market through their trading tactics.
While they can have influence, whale’s movements can be interpreted in different ways, so the data never provides a definitive indication.
For example, dormant addresses with large holdings suddenly becoming active could suggest selling, particularly if they go into an exchange deposit address.
Pseudonymous crypto analyst TXMC, host of YouTube channel Alpha Beta Soup, warned “against using “whale” metrics and making declarations about them,” in a June 15 X post.
They explained that when large amounts of Bitcoin are being sold by whales in a short period of time, it doesn’t always indicate a sell-off is happening.
“The mechanical stepwise drawdown here speaks to wallet mgmt and you are only seeing part of a larger pie. These are sometimes firms & institutions with multiple wallets and hundreds/ thousands of clients,” they claimed.
“Data around these entities is notoriously noisy, and I can almost guarantee that the big ‘whale’ wallets you’re watching are ETFs, and exchanges,” Check explained in a May 7 post.
“Cheap engagement bait in my honest opinion,” he added.
Social media posts covering whale movements tend to generate significant interest.
A recent post by pseudonymous crypto trader Marty Party discussing Bitcoin whale activity garnered over 205,000 views.
“Bitcoin OG whales have sold over 50,000 BTC in the past 10 days, totaling approximately $3.30 billion,” Marty Party wrote on June 14.
Analysts use the data to point out when whales have different thoughts on market
Analysts who cite Bitcoin whale movements often provide graphics to compare the activity over time.
“While you are scared, whales just bought $1.3 billion worth of Bitcoin,” Bitgrow Lab founder Viviek Sen wrote on June 14 along with a graphic extracted from crypto analysis firm CryptoQuant.
However, other analysts still look to whale movements to gauge the market’s direction.
On May 15, CryptoQuant said that Bitcoin whale demand is again in “acceleration mode” following a two-month downtrend.
“Bitcoin demand growth seems to be stabilizing after being in a decelerating trend since March,” it said.
CryptoQuant cited the data to claim that demand would need to accelerate further to sustain this price rally.
