• Bitcoin whale addresses have not been this high since August 2019
  • Grayscale report says Bitcoin is the best bet to hedge against the ongoing debasement of US dollar

Bitcoin markets along with crypto continue to find stable areas to trade, taking a breath after a rally over the last two days that really looks to sustain some momentum into the coming weeks and months.

And now, with just ten days to go to the next Bitcoin reward halving event estimated on 12 May 2020, there is mounting evidence to show that whales are accumulating even more Bitcoin as the markets look rejuvenated. Whales, the nickname given to large Bitcoin investors, are classified by blockchain data analysts Glassnode, to be those addresses holding 10,000 Bitcoins or more. And, according to them, this total became 111 this week, the highest it has seen since 2 August 2019.

In fact, it was just below 100 in early March, so it is clear that in the past two months, more whales have bought up Bitcoin. Crypto and index fund tracker provider Stack’s co-founder Matthew Dibb said:

“The increase in the number of BTC addresses with more than 10,000 BTC is likely the result of long-term holders coming back online to expand their holdings.”

So is it really just the halving that will reduce new Bitcoin generated by half, that is pushing more long-term holders and big investors into Bitcoin? Or are the economic situations and other macro factors also getting to be more convincing? Since Bitcoin supply is capped at 21 million, and with just 10% of it left to mine, and a hard-coded 50% rate cut of new supply roughly every four years, no other currency in the world has ever been made quite like Bitcoin. The founder of crypto buying and spending platfrom Coincurve, Wayne Chen, further explains the situation:

“Some of these addresses may belong to high-net-worth individuals or groups, who are diversifying into bitcoin amid the ongoing coronavirus pandemic and ahead of the mining reward halving, due in the next two weeks.”

Simon Peters, eToro analyst, points out that many Bitcoin advocates see it as a safe haven asset, and a hedge against inflation, despite it also crashing in March — as did many other safe haven assets like gold. However, now that money printing is essentially limitless by central anks, and with the global pandemic causing economic crises to deepen, that belief has become even stronger. Peters said:

“Amid the deteriorating economic outlook for the U.S. economy and the likelihood of an ever-increasing monetary supply, which weakens the U.S. dollar and stokes inflation fears, we believe bitcoin could easily test previous highs above $19,000 as investors look for safe havens away from traditional assets.”

Digital asset manager Grayscale Investments also agrees, as it stands. According to its latest report called Quantitative Tightening, the best bet for investors to hedge against central bank money printing is going to be Bitcoin.

The unbridled money printing, which the US Federal Reserve promises it will do until the economy stabilizes, will “debase” the US dollar, says Grayscale, and while gold and other precious metals have always been seen as the go-to hedge against fiat debasement, that form of asset has become “antiquated”.

Bitcoin, in comparison, makes for the ideal safe haven asset, with its superior technical features putting it miles ahead of gold, fiat and government bonds. The report underlines that we are now living in the “most aggressive monetary policies since Bitcoin’s creation” with unlimited money printing threatening hyperinflation for fiat and growing fears of default due to unsustainable debt. It reads:

“Fiat currencies are at risk of debasement, government bonds reflect low or negative real yields, and delivery issues highlight gold’s antiquated role as a safe haven. There are limited options to hedge in an environment characterized by uncertainty… Bitcoin is showing signs of becoming a safe haven while maintaining an asymmetric return profile.”

 

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