Are whales going to sell Bitcoin? What impact does the U.S. Inflation Reduction Act have on the market?

Source: Talking About Li and Outside

In recent days, the market seems to lack some emotional heat. Bitcoin continues to fluctuate in a high range, and the overall trend appears relatively stable. Most people (funds) may still be observing or waiting for some important news, while daily discussions among partners in the group mainly focus on some hot news topics:

(1) The ancient whale of BTC dormant for 14 years awakens

I briefly looked into this, and the news seems to have originated from a tweet by Lookonchain, which indicates that a Bitcoin holder with at least 80,000 BTC has begun to awaken after 14 years of silence and has gradually transferred their holdings. As shown in the figure below.

Subsequently, this news began to spread rapidly across major crypto media and self-media platforms, leading to various speculations. For example, some say this ancient whale is an independent miner from 2011, others say it is a Chinese individual released after serving time, and some suggest it is a major player testing the market's reaction…

As for who exactly owns these 80,000 Bitcoins and why they chose to awaken now, whether it is a response to potential massive selling pressure in the market or just a test by a major player, we cannot know for now. However, from the price trend of Bitcoin over the past two days, it seems that funds have not shown any signs of panic selling due to this event.

I view such news quite calmly. If anyone is interested, you can use on-chain data tools like Arkham to monitor the transfer movements of those Bitcoin addresses in real-time.

Since we are talking about whales, let's also take a look at the overall dynamics of Bitcoin whales at different levels:

By observing on-chain data, Shark wallets (holding 100–1K BTC) are still actively accumulating, while Whale wallets (holding 1K-10K BTC) and Humpback wallets (holding >10K BTC) have been in a selling trend overall in the past year. As shown in the figure below.

From this data, we can further speculate that Bitcoin seems to be entering a structural capital redistribution process over the past year, with early whales starting to exit while some institutional/fund medium players begin to take over and gradually build positions. I believe that in the medium to long term, whale selling may not necessarily be a bad thing. A more decentralized Bitcoin can reduce the risk of price manipulation by whales to some extent. In other words, while whale selling may exert pressure on short-term prices, as long as medium players can continue to accumulate, the market still holds promise for the medium to long term. However, in this game of human wealth migration, it is likely that the ones who suffer more will be Crabs (wallets holding 1–10 BTC) or Shrimps (wallets holding <1 BTC).

(2) U.S. House of Representatives votes to pass the "One Big Beautiful Bill"

In last month's article, we highlighted two bills: The GENIUS Act (full name: Guiding and Establishing National Innovation for U.S. Stablecoins Act) and The CLARITY Act (full name: Crypto Legal Accountability, Regulation, and Transparency for Innovation in Technology Act). Both are closely related to the crypto market; the former is an important bill to regulate and legalize the stablecoin industry, while the latter will establish clear rules to classify digital assets as commodities or securities.

The recently passed "One Big Beautiful Bill," while seemingly unrelated to the crypto market, signifies that the U.S. government (under Trump) will continue to implement a more aggressive fiscal expansion plan.

We can view this from two angles: in the short term, the series of measures brought about by the One Big Beautiful Bill will certainly help boost employment, stimulate consumption, and revitalize the stock market. However, in the long term, it may also bring risks of debt imbalance and lead to continued depreciation of fiat currency.

Overall, these bills seem to be long-term positives for scarce assets like Bitcoin, further enhancing Bitcoin's digital gold attributes.

(3) FTX compensation plan excludes Chinese users?

Regarding the FTX compensation issue, we have discussed and tracked it several times in previous articles. Many people have been waiting a long time to finally receive compensation, which is something to look forward to. However, news has emerged recently that creditors from 49 jurisdictions, including China, may lose their right to claim compensation. These creditors account for 5% of the total compensation funds, worth approximately $825 million (based on a total compensation asset of $16.5 billion), with 82% belonging to Chinese creditors, whose claim assets are valued at about $676.5 million.

The memory of the FTX collapse in 2022 is still fresh in many people's minds. After more than three years of waiting, what was promised as bankruptcy liquidation may ultimately turn into a "legal plunder," leaving those excluded from the legal system, particularly Chinese users, with no recourse. Currently, they seem to have to attempt to claim their rightful compensation through special means (such as transferring claims to entities outside China or using trustees or other entities outside China to transfer claims), which is indeed quite tragic.

What is more painful than losing money in trading is having your money taken away so blatantly by others, while you are powerless to do anything about it.

In summary, the market will always have various news that can attract people's attention. It seems that the market will not let us feel too lonely; whenever the market is relatively dull, we often see interesting news like the above suddenly breaking out. However, regarding the overall market trend going forward, we maintain the main viewpoint (speculation) from the previous article: although there are still many uncertainties ahead, if the script remains unchanged, we are likely to see Bitcoin break new historical highs in the third quarter (or postponed to the fourth quarter).

As always, if you value long-term opportunities, just continue to accumulate more Bitcoin according to your trading plan. If you value short-term opportunities, it is still a phase to focus on and look for those solid projects, and there is no need to exhaust all your energy on various news reports, which may bring you additional FUD.

So, how can we better and faster discover phase opportunities?

(1) Based on technical aspects

For example, many people pay attention to candlestick charts every day, but most likely, they are just staring at the prices on the candlestick charts. If we can use candlestick charts to discover some leading and lagging price reactions, we can quickly identify potential Alpha opportunities.

We previously summarized some basic knowledge about candlestick charts in our public account (Talking About Li and Outside DAO), such as breakout structures, moving average golden crosses, MACD, RSI, volume-price resonance, etc. We won't elaborate on that here; those interested can refer to historical articles.

However, we need to remind you to pay attention to the time frames you are using (hourly, daily, weekly) and to identify the trading volume/trading depth of the tokens, especially for small tokens or meme coins, where the candlestick charts may not hold much significance (the market makers can draw them however they want, without any bottom line).

(2) Based on data aspects

Since the beginning of this cycle, it has become relatively difficult to earn substantial profits directly through altcoins, as there are thousands of new coins launched every day, and liquidity is more dispersed than ever. Additionally, with the recent trend of tokenizing stocks (bringing U.S. stocks on-chain), while on-chain stocks can bring some new liquidity and attention, they also further dilute existing liquidity.

However, as long as the market's volatility characteristics remain, and narrative hype can continue, using relevant tools to study and track data to discover potential opportunities remains an effective approach.

Regarding data tools, we have already included quite a few in the "Talking About Li and Outside Toolbox," and we shared some in last year's (2024) e-book "Blockchain Methodology." Here are a few reminders:

For example, Dexu, a data platform based on on-chain and social analysis, provides a series of data such as popular narrative rankings, narrative price performance, industry analysis, project analysis, and market signals. As shown in the figure below.

From the figure above, we can see that the three fastest-growing narratives in the past seven days are L1, Crypto Stocks, and Sweet-spot. Among them, the top three projects in price performance for L1 are PLUME, CELO, and ETH, while the top three for Sweet-spot are PENGU, AAVE, and HYPE. This seems to align with recent market performance, as the hype around the Crypto Stocks concept has been quite strong, while L1 embodies technological integration, and Sweet-spot represents ecological landing, all of which are reasons for the good price performance of such projects.

Regarding Crypto Stocks, let's discuss it a bit more. Many people now view Crypto Stocks as a significant bearish factor for the crypto market because it can lead to the diversion of existing liquidity, which is theoretically correct, as mentioned earlier. However, I believe that Crypto Stocks are historically significant for the development of the crypto industry. We don't need to view the entire crypto industry negatively just because of this phenomenon; we should give it some time to practice. Moreover, compared to the traditional stock market, there are still some interesting aspects to Crypto Stocks, such as:

• People can invest in private companies like OpenAI and SpaceX through platforms like Robinhood, which was previously difficult for retail investors (although participating in this form does not represent true shareholder rights).

• If related Crypto Stocks can be used permissionlessly in DeFi in the future, the potential for this is quite large.

Currently, the global stock market capitalization is about $122 trillion (according to WFE report data), while the market size of Crypto Stocks is only $425 million, as shown in the figure below.

Let's imagine that in the near future, people can directly use protocols like Pendle to bet on the future dividends of American companies, or use protocols like AAVE to collateralize on-chain stocks for lending. Even during traditional stock market off-hours, trading can continue on-chain, and compared to traditional stock trading, on-chain trading can offer lower fees, better trading experiences, and higher capital utilization. Doesn't that sound interesting? Of course, Crypto Stocks will face regulatory issues moving forward, but with the ongoing regulatory efforts and related bills concerning the crypto industry (mainly in the U.S.), there will certainly be corresponding solutions in the future. Let's let the dust settle for a while.

Another example is Artemis, a comprehensive on-chain data analysis platform that provides various dimensions of data analysis, including data comparisons across different chains, data comparisons across different protocols, stablecoin data across chains, developer activity across chains, and comparisons of on-chain capital inflows and outflows. As shown in the figure below.

From the figure above, we can see that the three chains with the highest net capital inflows in the past seven days are Ethereum, Polygon, and Unichain. The Ethereum side may primarily be driven by the recent hype around RWA topics (as many RWA projects are built on Ethereum), and it may also be related to expectations surrounding ETH ETF staking. Polygon likely benefits from the recent popularity of the Crypto Stocks concept. As for Unichain, UNI, being a typical Sweet-spot, may have recently attracted some capital.

Due to space limitations, we will simply list Dexu and Artemis as two data tools. Those interested in more on-chain tools can refer to our previously organized "Talking About Li and Outside Toolbox." Additionally, besides the technical and data aspects mentioned above, you can also make auxiliary judgments based on macro aspects, news aspects, and various other dimensions, which should be chosen based on your capital size, investment cycle plans, and personal risk preferences.

Of course, the examples above do not imply that we should blindly buy related project tokens based solely on some data performance observed in the past or recently. The main purpose of using data and other dimensional tools is to help us identify narratives and projects worth further research. After all, there are now over 200 narratives (tracks) in the crypto field, and we cannot possibly have the time and energy to research them all. Data and other dimensional tools are meant to help us make directional choices.

On the basis of these directional choices, if we want to invest in a particular project or several projects, we still need to observe from certain angles, including the project's tokenomics (such as token distribution, token utility, whether there are large unlocks recently, etc.), community activity, product experience, product data performance (such as Fees/TVL/Revenue, etc.)… In short, we need to study the aspects that matter most to us, DYOR, and only consider investment after aligning with your preferences.

Moreover, these are all basic-level studies. The price performance factors in the market are often determined by multiple aspects, especially in a clear upward trend, where price movements may not pay much attention to the project's fundamentals. Emotions and capital hype can directly propel a token (represented by MemeCoins) to soar. However, in the long run, investing in projects with good fundamentals will certainly be much more stable than investing in meme projects, especially under overall harsh market conditions. Tokens with good fundamentals will at least feel relatively comfortable to hold.

However, regarding the selection process, our advice remains unchanged: newcomers should first add before subtracting, while veterans should directly subtract. Learning is a process of going from many to few, and most people's investment journeys are similar. With a grasp of the necessary foundational knowledge, we actually do not need to establish overly complex trading systems or strategies in the execution of actual trades, nor do we need to participate in too many project trades. Instead, we should learn to simplify for ourselves. As long as we find or form a few core indicators that suit us best and maintain a certain level of patience, we can basically lead over 90% of ordinary investors in this field.

That's all for today. The sources of the images/data referenced in the text have been added to the Talking About Li and Outside Notion. The above content represents personal viewpoints and analyses, only for learning records and communication purposes, and does not constitute any investment advice.