Hope Burns Eternal for Bitcoin Rebound

These days, it’s hard being a Bitcoin bull. As of midday Tuesday, the largest cryptocurrency was off 3.52% over the prior week, a downside that included another wave of weekend liquidations of leveraged long positions across major exchanges.

That is to say, investors can be forgiven for not running to embrace ETFs such as the CoinShares Bitcoin ETF (BRRR). Yes, any ETF, including BRRR, that provides spot Bitcoin exposure is worse for the wear this year, but that doesn’t mean now is the time for market participants to ignore Bitcoin or ETFs such as BRRR. Actually, the opposite could prove true.

In a note out last week, deVere Group CEO Nigel Green points out that much of Bitcoin’s recent selling was absorbed by so-called whales, or holders of wallets with at least 1,000 Bitcoin. Green says that during the second week of February, whales bought 53,000 shares, marking their largest buying spree in three months.

BRRR Could Benefit from Whale Buying

Although whales have been absorbing some of the Bitcoin sell-off, the digital currency continues to trend lower, indicating that other issues need to be worked out before Bitcoin and BRRR can notch credible rebounds. Those big purchases remain notable.

“The 53,000 BTC accumulated in a single week equates to more than $4 billion at prevailing prices. In a market where newly mined supply remains structurally limited, concentrated buying by long-term holders tightens available float. Liquidity conditions can shift quickly once supply is pulled into strong hands,” according to deVere.

History could augur well for HODLers and BRRR investors. As Green points out, whale buying following sustained periods of weakness is often followed by periods, some lengthy, of upside for Bitcoin.

“A 40% pullback resets positioning and removes excess leverage. Whales accumulating at this stage are signalling that they see long-term value and scarcity,” notes Green.

For market participants directly holding Bitcoin and those engaged with ETFs such as BRRR, another factor to monitor is the possibility of fiat money coming off the sidelines in anticipation of a Bitcoin rebound. Should that happen, and for size, BRRR could rally.

“If sidelined capital begins to re-enter while whales continue accumulating, upside pressure can build quickly,” adds Green. “Consolidation below prior highs is likely building the base for the next structural rally.”

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