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Unlike Retail Investors, Bitcoin Whales And Institutions Buy Low And Sell High: OKEx Report

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A recent report posted by the popular cryptocurrency exchange OKEx says that retail investors had chased BTC’s price when it was heading higher in the past few months. In contrast, whale traders and, possibly, institutions were taking profits and primarily buying the dips.

Retail Traders Chase The Price; Large Investors Take Profits

OKEx partnered with the blockchain data company Kaiko to analyze data from the most utilized trading pair on the exchange – BTC/USDT. The two organizations followed the performance from August 1st, 2020, to November 30th, 2020.

They separated the activity on that trading pair into a few different categories. These include retail traders (transactions under 0.5 BTC), between 0.5 BTC and 2 BTC, between 2 BTC and 5 BTC (professional traders), between 5 BTC and 10 BTC, and 10 BTC or more (large traders, whales, or institutions.)

Despite insisting that orders with 10 or more bitcoins come from large traders, whales, and institutions, the report admitted that it is actually harder to distinguish them as there are no strict thresholds for those types of traders.

Nevertheless, the behavior of retail traders seemed rather apparent during this period when BTC almost doubled in value. The table below, illustrating the dominating trend by month, shows that small-size investors continued to execute orders in October and November, despite the rising prices.

Traders' Behaviour From August To November. Source: OKEx
Traders’ Behavior From August To November. Source: OKEx

“Retail traders mostly kept adding to their positions during the price surge. The result of this could be that retail traders will be trapped in short- to mid-term.” – reads the report.

On the other hand, large traders (or whales and institutions) have accumulated the most substantial BTC portions around $10,000 and “decided to take profits during this rally.”

Behavior During The Thanksgiving Crash

Bitcoin and most cryptocurrencies didn’t have much to be thankful for during Thanksgiving a few weeks back. The entire market plummeted in value in a matter of hours.

The report also explored how the different investor types acted during these adverse developments. Rather expectedly, the paper asserted that smaller traders panic-sold their bitcoins, while whales and institutions bought the dip. The situation repeated once the market started to recover.

“This table shows how everyone except the majority of retail traders took profits as BTC reached its all-time high on November 30th.”

Bitcoin Investors' Actions During The Thanksgiving Crash. Source: OKEx
Bitcoin Investors’ Actions During The Thanksgiving Crash. Source: OKEx

Ultimately, OKEx and Kaiko highlighted the most significant differences between these traders, saying that “whales and institutions are in the business of buying low and selling high.”