On-chain Activity Indicates Weakening Whale Long Sentiment, Rising Observer Participation

A Bitcoin whale holding over $85 million reactivated after 13 years of dormancy, moving 909 Bitcoin to a new address. This move follows broader trends of long-dormant Bitcoin wallets resurfacing over the past year, according to blockchain analytics firm Santiment. Meanwhile, mid-sized holders have shown increased participation, with nearly 0.5% growth in wallets holding at least 100 Bitcoin since mid-November.

Large whale movements often trigger market unease, as they raise the possibility of sudden supply increases. Dormant wallets are typically associated with early adopters, and their reactivation is often interpreted as a sign of profit-taking or selling. Retail wallets, particularly those holding small fractions of Bitcoin, have continued to decline, contrasting with the rise in mid-sized holders.

Institutional sentiment has improved, with crypto exchange-traded products recording net inflows after months of outflows. Bitcoin led the rebound, attracting $1.55 billion in inflows, while Ethereum followed with $496 million. Smaller cryptocurrencies also saw gains, with Solana attracting $45 million. The return of institutional investors highlights growing confidence in the sector despite ongoing price fluctuations.

Why Did This Happen?

The reactivation of long-dormant Bitcoin wallets reflects broader on-chain activity patterns. Whale movements are often interpreted as potential selling signals, though uncertainty alone can drive price volatility. Institutional investors are also shifting strategies, as seen in a major $73.5 million Ethereum short position opened by a whale after a $4.09 million Bitcoin long loss.

This whale transitioned from a 10x leveraged Bitcoin long position to a 3x Ethereum short, suggesting a change in relative value expectations between the two leading cryptocurrencies. The new Ethereum short position has a liquidation price of $3,990.63, which means a 36% price rise from the entry point would result in a forced closure.

How Did Markets React?

Bitcoin's price has struggled to regain momentum after retreating from recent highs. However, early technical signs of stabilization emerged as the Chaikin Money Flow indicator moved above zero after Bitcoin fell below $93,700. Analysts see a potential rebound if the price continues to hold this support level. Ethereum's price action has also been mixed, with the price hovering near $3,000 amid fluctuating sentiment.

The broader market experienced significant liquidations, with over $1.08 billion in losses recorded in a single day, mostly in long positions. Bitcoin and Ethereum futures traders were particularly affected, with cascading margin calls forcing many positions to close. This event highlights the risks associated with leveraged trading, particularly in a volatile environment.

What Are Analysts Watching Next?

Market analysts are closely monitoring whale activity, particularly the movements of large holders and their impact on supply dynamics. Whale Alert and other tracking services play a crucial role in informing the market about significant transactions, such as the recent $266 million Bitcoin transfer from a Coinbase Institutional wallet to a new, unknown address.

Experts suggest that such transfers are often linked to custodial reallocation or long-term storage rather than imminent selling. However, the psychological impact of these large movements remains significant. For instance, a $266 million transfer reduces immediate sell-side pressure, potentially signaling confidence among institutional investors.

UBS Group AG is also exploring opportunities in the crypto space, planning to offer select private banking clients access to Bitcoin and Ether trading. This move reflects a broader institutional interest in digital assets as regulatory clarity and market infrastructure improve. Meanwhile, Nansen has introduced AI-driven trading tools that allow users to execute trades through natural language processing.

These developments highlight the growing sophistication of the crypto market. As on-chain analytics and trading tools evolve, investors and institutions are better equipped to navigate price volatility and market sentiment shifts. However, the recent liquidation event underscores the continued fragility of leveraged positions, especially amid macroeconomic uncertainty.

The coming weeks will be critical for Bitcoin and Ethereum as traders assess whether the current whale activity and institutional moves indicate a broader market trend or a temporary correction. Analysts will watch for further on-chain signals, including wallet activity and exchange flows, to determine the next phase of market direction.