Smaller Bitcoin investors are not deterred by FTX’s catastrophic collapse, with on-chain data showing that retail investors have stepped up their accumulation of the king cryptocurrency.
As categorised by Glassnode and other analytics platforms, Bitcoin shrimps are entities holding up to one whole BTC. Such wallets tend to spike during rapidly increasing in prices – a phenomenon that’s now a distant memory for those still in the industry.
These wallet users tend to act differently in bear markets too, either standing on the side-lines or disposing of their holdings. While there is no clear community consensus on whether BTC has witnessed a macro bottom, the asset has clearly taken a plunge comparable to prior cycle lows and accumulation periods.
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Yet, these entities resumed accumulating earlier this month, which coincided with the FTX collapse. In fact, they purchased 96.2K BTC in the past few weeks, which is “an all-time high balance increase.” The company’s recent report said they hold over 1.21 million BTC or about 6.3% of the circulating supply.
#Bitcoin Shrimps (< 1$BTC) have added 96.2k $BTC to their holdings since FTX collapsed, an all-time high balance increase.
This cohort now now hold over 1.21M $BTC, equivalent to 6.3% of the circulating supply.
Pro Dashboard: https://t.co/HpXwoav6wO pic.twitter.com/7U4oPAAakD
— glassnode (@glassnode) November 28, 2022
Bitcoin crabs (up to 10 BTC) are n a similar situation. These wallets have seen an ‘aggressive balance increase of 191.6k BTC over the last 30 days’, breaking the July 2022 all-time accumulation peak.
At the same time, however, Glassnode warned that bitcoin whales have been ‘lightening‘ their holdings by offloading 6.5K BTC to exchanges within the same period. Regardless, the analytics resource said this distribution remains ‘very small relative to their total holdings of 6.3M BTC.’
The primary cohort which has been lightening their #Bitcoin holdings are Whales (1k+ $BTC).
Whales have released approximately -6.5k $BTC to exchanges on net over the last month.
Whilst this is distribution, it remains very small relative to their total holdings of 6.3M $BTC. pic.twitter.com/1VoRmVAXFb
— glassnode (@glassnode) November 28, 2022
FTX Fraud and Financial Contagion
The exchange’s spectacular collapse came after Sam Bankman-Fried used customer deposits to fund sister firm Alameda Research without user consent. This is fraudulent and criminal behaviour in any jurisdiction that is not a banana republic.
The size and scope of the collapse has resulted in a flurry of liquidations and insolvencies, with BlockFi filing for bankruptcy this week as is it revealed a $1-$10 billion hole in liabilities with only $256 million in cash on hand.
Crypto lender firm Genesis, one of the world’s largest lenders is also under fire from regulators as it experiences financial contagion from the FTX scandal. The firm has warned that without funding, it too faces bankruptcy. Per a Bloomberg report on Nov. 21, Genesis has spent the days following the collapse in search of at least $1 billion in fresh capital.
Notably, the SEC did not allow Grayscale’s GBTC-ETF conversion, a move that would have safe-guarded investors from the FTX fraud.
Still, talks by people who wished to remain private (per Bloomberg) mentioned a potential private investment from Binance.
‘We have no plans to file bankruptcy imminently,’ a representative for Genesis said in an emailed statement. ‘Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.’
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