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The crypto faithful continue to buy the dip

By CryptoVista Staff
July 3, 2022 0

It’s difficult to find news around the crypto market that is positive at the moment. A big crash a few weeks ago, followed by ongoing volatility and bearish predictions of doom, continues to shake the entire market.

And yet, data suggests that the crypto faithful are still eagerly buying the dip, with the number of people holding more than 1,000 BTC having grown overall this year.

The data comes from IntoTheBlock, an analytics and buying guidance website that specialises in digital currencies. “In the last multi-year long bear market Bitcoin whales took advantage to accumulate at a high pace,” Juan Pellicer said in an interview with Decrypt website. He did note that these “whales” were not acquiring assets quite as enthusiastically as the last time there was a drop in the market, but nonetheless, there remains confidence that these assets are viable and have growth ahead of them.

This is supported by earlier data from Glassnode, that shows that the whales have been aggressively purchasing assets. This category of investor now holds almost half (45.6 per cent) of the total supply of Bitcoin.

The question that needs to be asked here is whether this buying activity is substantiated on anything, and the market will return to a position of growth, or whether this is a textbook case of a sunk cost fallacy. There are competing arguments here.

One common argument is that the volatility in crypto – particularly with regards to this current “winter” – closely aligns with the warning signs and events of the Dotcom era. That was, famously, a bubble that did burst. However, as crypto enthusiasts point out, the enthusiasm about the Internet has proven true, as we can see in abundance today.

On the other hand, the Internet became a tightly regulated place and while there have been efforts to regulate crypto, it remains a “wild west” of investment. Without rapid regulation, some would argue, the path to a turnaround isn’t clear. What’s more, while crypto enthusiasts will point to data that suggests a turnaround for digital assets is imminent, much of the analysis of the sector is done from within, and there are indicators that such data is more confirmation bias than anything meaningful.

Either way, the predictions are that, while crypto whales may ultimately be proven true, they’re going to need to be in it for the long haul, because most sober analyses of crypto suggest another six months to a year before any recovery is sustained.


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