Tracking the wallet movements of Bitcoin BTCUSD whales — a Bitcoin holder with a significant stake compared to smaller investors — will not lead to “true alpha,” according to traders, despite the metric used as a popular way to speculate on market sentiment for some time.
“Don’t whale watch kids, it’s not useful information,” onchain analysis firm Glassnode lead analyst James Check aka “Checkmatey” wrote in a June 15 X post.
“Not once have I seen true alpha extracted from whale watching. It’s good for social media, but is almost never serious nor valuable analysis,” he added.
It is a common belief among crypto traders that Bitcoin whales with substantial Bitcoin holdings are capable of influencing the market through their trading tactics.
While they can have influence, whale’s movements can be interpreted in different ways, so the data never provides a definitive indication.
For example, dormant addresses with large holdings suddenly becoming active could suggest selling, particularly if they go into an exchange deposit address.
Pseudonymous crypto analyst TXMC, host of YouTube channel Alpha Beta Soup, warned “against using “whale” metrics and making declarations about them,” in a June 15 X post.
They explained that when large amounts of Bitcoin are being sold by whales in a short period of time, it doesn’t always indicate a sell-off is happening.
“The mechanical stepwise drawdown here speaks to wallet mgmt and you are only seeing part of a larger pie. These are sometimes firms & institutions with multiple wallets and hundreds/ thousands of clients,” they claimed.
“Data around these entities is notoriously noisy, and I can almost guarantee that the big ‘whale’ wallets you’re watching are ETFs, and exchanges,” Check explained in a May 7 post.
“Cheap engagement bait in my honest opinion,” he added.
Social media posts covering whale movements tend to generate significant interest.
