BTC Shrimp Evolve and Get Smarter – Glassnode
Date: 2023-09-13 Author: Karina Ziganova Categories: BLOCKCHAIN
The cryptocurrency world is inhabited by different creatures. Each type is a type of investor with a certain BTC balance in their wallet.
The most modest creatures among the inhabitants of the crypto seas are shrimp. These are investors who own less than 1 BTC. In general, they represent a segment of retail investors. Interestingly, according to the latest on-chain data, they are evolving and becoming smarter.
The recent long-term trend showing shrimp buying dips is a sign of the growing level of mass adoption and awareness in the cryptocurrency space. Moreover, when combined with the percentage of addresses that are in profit, this could signal an approaching bull market.
Shrimp have become wiser and buy on dips
Leading Glassnode analyst @_Checkmatey_ posted a tweet showing off his “favorite chart.” It concerns the long-term behavior patterns of “shrimps”, i.e. Bitcoin network addresses with a balance of less than 1 BTC.
In the chart, we see many details that illustrate the radical change in the behavior of small Bitcoin investors over two consecutive cryptocurrency market cycles. First of all, on the left side of the graph we see a spike (red circle) at the end of 2017.
Then, at the very end of the previous cycle's bull market, shrimp bought over 50,000 BTC in a month. A collective feeling of FOMO trapped them and forced them to learn the basics of investing the hard way.
In contrast, on the right side of the chart we see the behavior of the same shrimp addresses at the end of the 2022 bear market. Interestingly, the explosion of retail buying occurred at two market lows, during the 3AC crash (June-July) and the FTX crash (November-December).
Analyzing the behavior of small investors from January 2022 to the present (green arrow), you can also see that shrimp are constantly increasing their positions and stocking up on satoshi. They have already accumulated 1.35 million BTC, which is 6.9% of the total supply of the world’s main cryptocurrency.
Crypto education in action
Checkmate comments very optimistically on the posted chart. Regardless of the price movement, he points out that the dramatic change in behavior of retail network participants is indicative of the growing mass adoption of cryptocurrencies and the level of investor awareness. In addition, he notes the effectiveness of education in the cryptocurrency sector. The analyst writes:
“I believe this chart demonstrates, like no other, the success of the tireless efforts, breadth of discussion, and collaborative wisdom of the #Bitcoin education machine.”
In his opinion, such conscious and bold buying on dips would not have been possible without the appropriate level of knowledge of retail investors. Moreover, he emphasizes, “BTC is not paying us to study, discuss, study and analyze this thing.” These efforts are additional value created by the crypto community. A community that believes that the selfless exchange of ideas and a kind of “crypto-evangelism” work for the common good. Checkmate concludes:
“Bitcoin is a driving force for a better world. Not because we are changing it, and not because it will necessarily change the world. Bitcoin is changing us for the better, and it makes me happy to see that.”
Addresses in Profits Test Double Historical Support
The shrimp are getting smarter and buying Bitcoin at the best price. In addition, the long-term chart of the share of BTC addresses in profits shows an interesting situation. This indicator reflects the percentage of unique addresses that hold coins with an average purchase price lower than the current one.
First of all, we see that the recent decline in BTC price has caused the metric to retest the historical support area in the 55-60% range (blue area). At the beginning of the previous two bull markets (red arrows), this area acted as support and signaled the start of an uptrend.
The first quarter of 2020 saw a significant deviation below this level. This was a consequence of the emergence of a “black swan” in the financial markets - the outbreak of the COVID-19 pandemic (purple arrow).
Chances are that if this area holds, it will serve as a catalyst for the upcoming bull market. Moreover, shrimp can be expected to continue to be purchased if their balance sheets remain in profit.
Moreover, the indicator appears to be moving along the long-term ascending support line (black). This line has already been tested twice for strength (yellow circles) and has recorded two deviations below it.
This historical support is now being tested again and there is a strong possibility of a rebound from here. This could serve as another on-chain signal for the start of a bull market.
