Bitcoin price experienced an unusual reversal trend over the weekend with at least a 5 percent gain as BTC traded above $35,000 with data showing whales staged the largest accumulation buys since the beginning of 2021.
According to a recent tweet by Santiment, an on-chain analytic company for blockchains and cryptocurrencies, whales purchased up to 60,000 BTC within a day between July 3rd and 4th. Santiment stated in a tweet that:
“Bitcoin whale addresses holding between 100 to 10k BTC kicked off July with a 60k BTC accumulation spike, the highest daily spike of 2021. These addresses hold 9.12M coins combined after holding 100k less BTC just 6 weeks ago.”
From the chart, it can be deduced that Bitcoin whales have been in the accumulation phase for the past six weeks exactly since the May crypto market crash that has seen it wiped off more than $800 billion from the crypto industry’s market capitalisation.
As whales continue to accumulate BTC, this phase coincides with the reduction in the bitcoin mining difficulty level. As reported by several crypto media houses, the Bitcoin network experienced the largest single drop of mining difficulty since the network’s creation in 2009. The drop recorded a staggering 28%, representing its biggest single adjustment in history. The change saw the hash rate also hit a new 19-month low of 87.6 TH/s. Although this may pose some concerns in some quarters especially with the correlation between BTC price and mining difficulty level, it is however not a direct cause-effect relationship. As on-chain data shows, the Bitcoin network’s mining difficulty level has been on a steady decline rate since the coin touched its highest price of above $63,000 in April.
A major contributor to the Bitcoin network’s hashrate fall is the mass exodus of Bitcoin miners from China due to the Chinese government crackdown on cryptocurrency mining. China has made it clear it has zero tolerance for any cryptocurrency mining entity within its borders. Chinese crypto mining ban sparked off a mass exodus from provinces like Sichuan, Mongolia and Xinjiang known for their cheap energy sources to the west, especially the state of Texas in the United States. Many experts continue to tout the crackdown of mining operations from China to the West as a net positive outcome for the Bitcoin network which the likes of Elon Musk have criticised to be not so decentralised. The tech billionaire and CEO of Tesla took the Bitcoin community up as regards the concentration of hash powers in just a few Chinese provinces. With the migration of mining companies, the Bitcoin network’s hash rate fall and adjustment results in a more dispersed network in terms of hash powers.
Although there’s been a massive reorganisation of the BTC network’s hashrate, it currently bears no negative effect on its price. As of press time, BTC price retraced about 2 per cent and is trading at $34,600, just slightly below $35k.