Sell ​​signal? What do sleeping bitcoin transfers mean to the market?

Sometimes a cryptocurrency comes into motion, which for a long time was stored in one wallet and was considered lost. How such transactions affect the crypto market and who is behind them?.

On July 13, bitcoin came into motion , which had been at the same address for more than 9 years. Two transactions were recorded to transfer 740 bitcoin, stored in one wallet since May 2012.

Nine years ago, the cost of these coins was $ 3.7 thousand ($ 5 per BTC), and at the time of the transaction – $ 26.1 million. Over 9 years, the value of digital coins has increased 7 thousand times.

On July 13, the quotes of the main cryptocurrency (bitcoin) fell by 2.5%. The price of the digital coin dropped to $ 32.4 thousand.

On July 14, bitcoin continued to fall amid reports from China, where another province imposed a ban on cryptocurrency mining.

The last time this happened was in February this year. Then a large bitcoin holder transferred 100 coins to other addresses, which had been in his wallet without moving since June 2010.

Some old coins moved today (100 BTC from June 2010).

It's very rare to see pre-GPU era bitcoins move, it only happened dozens of times in the past few years.

And no, it's probably not Satoshi. pic.twitter.com/0jZXnmWUes

— Antoine Le Calvez (@khannib) February 24, 2021

Their total cost was about $ 8, and at the time of the transaction it reached $ 5 million – over 11 years the price increased 622.5 thousand times. After the transaction within a day, bitcoin fell by almost 6%.

A similar reaction could be traced in early October last year, when bitcoin, inactive since 2010, came into motion. In total, the user sent 50 coins ($ 522 thousand at the exchange rate at the time of the transaction). After that, over the course of the day, the main cryptocurrency (bitcoin) fell by 1.5%.

Moving inactive bitcoins does not necessarily indicate a sale. The transaction only indicates the fact that digital coins were transferred from one address to another.

Inactive coins

About 20% (3.7 million coins – $ 120 billion, taking into account the current exchange rate as of July 14) of the already mined bitcoin (18.5 million coins) are inactive.

This means that these coins have not been used for transactions for several years. However, it is impossible to say for sure if access to these bitcoin is lost, or if they are owned by early investors.

Similar data in 2019 was provided by the Coin Metrics analytical platform. According to a study by analysts, about 21.6% of all bitcoin mined at that time had been inactive for more than 5 years.

Coin Metrics believes this indicates the emergence of the first cryptocurrency (bitcoin) as a store of value rather than a speculative asset.

Investor concerns

When inactive bitcoin start to move for years, this puts pressure on quotes, says lead analyst at 8848 Invest Viktor Pershikov. According to him, the community believes that early cryptocurrency investors can regard current prices as the maximum over a long period and assume a significant decrease in value.

At the same time, it is not possible to determine the true nature of actions with coins on old wallets: a transaction can be either a consequence of a successfully restored access to a wallet, or a purchase of some other assets for bitcoin, added Pershikov.

Early coins periodically “wake up”, but not often, so such events are of particular interest, says Nikita Zuborev, senior analyst at BestChange.ru.

Zuborev argues that the market’s reaction to this can be explained by the effect of psychological manipulation of FUD (the use of news that generates “fear, uncertainty and doubt”).

“As in previous times, the effect manifested itself after the twitter bot“ Whale Alert ”announced the transfer of coins. Such news gives rise to short-term panic and misunderstanding, but soon after that everything will return to normal and investors calm down, ”Zuborev said.

The transfer of coins on old wallets cannot be regarded as a signal that indicates the release of early investors from cryptocurrency on the eve of a decline in quotations, Pershikov is sure.

In his opinion, now no one can say for sure what will happen to the bitcoin rate on the horizon of 10-15 years.

“The movement of inactive coins causes a local reaction rather than a global one,” said a lead analyst at 8848 Invest.

A transaction to transfer inactive bitcoin for a long time may be evidence of an over-the counter transaction, which is likely against the backdrop of growing interest from large investors, says a senior analyst at BestChange.ru.

According to Zuborev, this does not always mean that the initial investor was disappointed in the future fate of bitcoin, most likely, he could have considered the profitability thousands of times sufficient to fix the profit.