Excitement and participation around Bitcoin has been building up this week with multiple noteworthy developments. The Bitcoin network hash rate soared to new highs this week and a surge in whale activity signaled potentially exciting times ahead.
The Bitcoin hash rate soared to 837.967 EH/S on 20 October, the highest level that it has ever achieved. It has historically offered insights into network activity, health to some extent, and the level of optimism.
The surge to new highs was consistent with the recent bullish BTC price action. However, the price has had previous bullish phases where hash rate did not necessarily rally in tandem. The difference this time could be the timing.
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Bitcoin Whale Activity Balloons to Historical Levels
Recent data shows that whale and institutional activity has been on the rise, suggesting that they have been accumulating this month. An unsurprising outcome since more whale activity was expected following lower interest rate announcements.
Lower interest rates translate to better liquidity conditions for risk-on assets. This could underscore the situation in the coming months and would explain why whale activity has been growing.
According to Glassnode, the number of entities holdig over 1,000 Bitcoin recently pushed into levels previously seen in 2021. Note that this was also around the same time that BTC peaked that year.
The above chart suggests that whale and institutional activity was back to levels previously seen during the 2021 bull run. This development combined with hash rate’s historic highs confirmed that investor exitement has been brewing.
The differences between the previous bull run and the latest rally were clear. Every hitoric Bitcoin peak in the past was characterized by euphoria and extremely volatile conditions. However, Bitcoin did not demonstrate euphoria in its latest performance.
The Next Major Rally at Play?
Whales and institutional buyers have been on the rise, after some sideways activity between May and September. They have historically jumped back into the market earlier than retail buyers. This could thus indicate that the next few months and especially 2025 might be characterized by a major rally.
The above observation was consistent with the latest exchange reserve data. According to CryptoQuant, Bitcoin exchange reserves registered a sharp decline since the start of October.
The reserves drpped by roughly 53,394 btc in the last 3 weeks, which was equivalent to over $3.62 billion at press time value. The BTC exchange reserves have been steadily declining since the start of 2024, confirming the state of demand so far in 2024.
Bitcoin’s latest exchange reserves hovered at levels last seen in November 2018 at the time of writing. Back then the reserves were on an overall uptrend but have flipped since 2021. A sign that more BTC scarcity might be coming.
These findings suggest that things might be about to get more heated up in te next few months. However, they also underscore the possibility that we may witness a surge in volatility in the coming months, warranting more caution.
