- Whales start off the week with a spike in activity in altcoins AAVE, COMP, CRV, IMX and YGG.
- AAVE and CRV witnessed an increase in supply on exchanges alongside massive whale transfers, signaling downside volatility.
- Whale activity is likely bullish for COMP, as there is an increase in whale holdings and decreasing supply on exchanges.
Whale activity, or moves made by large wallet investors, typically influence token prices and market capitalization. A rise in whale activity is associated with increased volatility. Large volume transfers valued at $1 million or higher are indicative of whales making moves in an asset.
Also read: Top 3 undervalued cryptocurrencies in their opportunity zones during Bitcoin season
AAVE and CRV whale transfers signal downside volatility
Aave (AAVE) and Curve Finance’s native token (CRV) witnessed whale transfers worth more than $1 million on Tuesday. Based on data from crypto intelligence tracker Santiment, the supply on exchanges for these two tokens has climbed consistently over the past week and the supply of the assets held by large wallet investors as a % of total supply has declined.
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AAVE and CRV supply held by top addresses vs supply on exchanges vs price
The above two on-chain metrics help determine whether whales are accumulating or shedding their holdings by sending them to exchange wallets. In the case of AAVE and CRV, it is likely the latter. Whale transfers greater than $1 million are associated with volatility in the two altcoins, however, a closer look reveals a higher likelihood of downside volatility.
%20%5b13.03.24%2c%2029%20aug%2c%202023%5d-638288929849637174.png)
AAVE and CRV whale transaction count (>$1 million), noted on August 29
COMP price likely to recover with rising whale activity
In the case of Compound (COMP), whale transfers greater than $1 million are likely bullish for the asset and capable of catalyzing a price recovery. Data from Santiment reveals that whale transfers have coincided with peaks in the asset’s price in the past.
%20%5b12.41.48%2c%2029%20aug%2c%202023%5d-638288930801234081.png)
COMP whale transaction count (>$1 million)
COMP supply on exchanges and whale token holdings are inversely proportional at the time of writing. A rising volume of whale holdings alongside a declining supply on exchanges is a bullish sign for the asset’s price.
%20%5b12.43.37%2c%2029%20aug%2c%202023%5d-638288931190914120.png)
Supply held by top addresses vs supply on exchanges vs COMP price
On-chain analysts at Santiment urge traders to pay attention to altcoins with greater than $10 million in transfers like Immutable (IMX) and Yield Guild Games (YGG), for price volatility this week.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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