According to a well-known analyst, the number of entities holding 0.1-1 BTC is growing faster today than it was at the end of the 2017 bull market.
In the vocabulary of cryptocurrencies, shrimp are entities that have less than 1 BTC. It turns out that today, the growth of this group of small investors has reached a new all-time high, surpassing even the historic bull market peak of late 2017.
In the equally well-known and humorous food chain of the Bitcoin network, shrimp rank near the bottom of the hierarchy, just above plankton, the last species of cryptocurrency organisms worth less than 0.05 BTC.
BTC “Shrimp” are growing in Strength
In a recent on-chain analysis, BeInCrypto noted that the number of small-sized BTC addresses has been steadily increasing, despite the deep market correction.
Both the number of addresses holding more than 0.01 BTC and those holding more than 0.1 BTC have been growing since the beginning of 2021.
Furthermore, this growth has further accelerated since mid-June 2022. In previous market cycles, this behavior of Bitcoin network entities and addresses has been characteristic of an accelerated bull market.
In contrast, during major market corrections, on-chain analysis tended to indicate a slight increase, stagnation, or even decrease in the number of addresses holding less than 0.1 BTC.
In a recent tweet, well-known analyst @WClementeIII posted a chart of the 90-day supply change held by users holding 0.1-1 BTC.
The chart shows a huge increase in Bitcoin held by the shrimp. Current values have surpassed levels from the tail end of the 2017 bull market, when Bitcoin hit an all-time ATH of $20,000.
In the current market situation, BTC is retesting this level after a 70% drop from the ATH to $69,000 recorded in November 2021. Bearish sentiment and extreme fear are creating radically different conditions from the euphoria and the extreme greed of the end of 2017.
However, the shrimps are behaving almost identically. Furthermore, they are hoarding Bitcoin with even more conviction that this is a good time to buy.
Why Shrimp Buy BTC
The extremely different behavior of small entities can be confusing from the perspective of the classic market truth that “retail trading is always wrong”.
If the shrimp were buying BTC at the peak of the 2017 bull market, the big players were the sellers. They dropped their possessions, leaving the market at the best possible time.
If, on the other hand, the shrimp are accumulating Bitcoin at a record rate after a 70% drop in ATH, who is selling them? Could it be that the big players are irrationally deciding to sell to the fund? Or do they expect more falls?
Another possible explanation is that the increase in the number of entities breaking below 1 BTC is not at all indicative of an influx of a large wave of small individual investors.
It could also be a large number of small addresses belonging to the same person or institution.
The latter possibility was suggested by famous analyst @woonomic in a comment on a tweet from his younger colleague. He wrote:
“Okay, but be aware that data from features like this are biased and overly optimistic about recent time periods. It takes about 2 years for the drift to stabilize. E.g. The small tx are supposed to be a new person and then found to be grouped into an existing person who has more than 1 BTC.”
Cryptocurrency podcast host @VentureCoinist, on the other hand, in his comment under the same tweet, seems to suggest the real possibility of the second option. In his opinion, shrimp buying BTC is a sign of upcoming dips:
“I’m going to pretend I don’t see the last time it went that high.”
By Audy Castaneda
