Bitcoin Market Turmoil: The Silent Shift of Control Behind a $2.1 Trillion Market Capitalization

Whale sell-off vs. institutional catch a falling knife, a quiet power transfer is reshaping the Bitcoin market. According to Bloomberg, despite the price hovering around historical highs (about $110,000), volatility has plummeted, and its investment attributes are undergoing a fundamental transformation.

🐋 Whale mass sell-off: over 5 billion USD BTC outflow

• Data organization 10x Research shows: In the past year, Bitcoin Whales (including early miners, offshore funds, and anonymous large holders) have reduced their holdings by more than 500,000 BTC, valued at over $50 billion at current prices.
• This scale is almost equivalent to the total net inflow of the Bitcoin spot ETF in the United States since its approval, and is close to the $65 billion position accumulated by Michael Saylor and his company MicroStrategy (now renamed Strategy) over the past five years.
• Many whales have a very low holding cost, and some are not simply selling off, but are exchanging BTC for equity through over-the-counter transactions (such as participating in financing transactions linked to the public market).

“What we are seeing is the turnover of the underlying positions… One less noticed reason is that whales are converting BTC into equity exposure linked to the public market through physical contributions.” — Edward Chin, Co-founder of Parataxis Capital

🏦 Institutions are aggressively accumulating: controlling a quarter of the circulating supply

• At the same time, Bitcoin ETF, MicroStrategy/Strategy, and numerous imitating listed companies have absorbed nearly 900,000 BTC in the past year.
• Currently, institutional investors hold approximately 4.8 million BTC, accounting for nearly a quarter of the total circulation of Bitcoin (about 20 million coins).
• Distinct Contrast: In 2020, only about 2% of anonymous addresses controlled 95% of BTC. Now, the Bitcoin ownership structure is rapidly shifting towards institutionalization.

📉 Fluctuation Erosion: Is Bitcoin’s ‘Wild’ Nature Fading?

• This turnover has caused the Bitcoin price to struggle to break through historical highs for months, even in the face of beneficial factors such as the Trump administration’s full support for cryptocurrency.
• Bitcoin volatility has significantly decreased: Deribit’s BTC volatility index has fallen to a nearly two-year low, indicating that the market expects a substantial reduction in annualized volatility over the next 30 days.
• “Cryptocurrencies are becoming less alternative and more a mature legitimate asset class… We expect fluctuations to continue to compress.” — Rob Strebel, Head of Relationship Management at trading firm DRW (which includes the crypto division Cumberland)

🔄 Identity Reshaping: From High-Risk Speculation to Long-Term Allocation?

• This silent transfer is turning Bitcoin from a “high-risk high-fluctuation asset” into a “slow-burning allocation asset”.
• Some analysts expect that the future annualized return rate of Bitcoin may be limited to the 10%-20% range, far lower than the nearly 1400% surge in 2017.
• “Bitcoin may resemble a boring dividend stock in the long run… averaging annual increases, but with diminishing returns, becoming more like an attractive retirement allocation asset.” — Arca Chief Investment Officer Jeff Dorman

⚠️ Risk Warning: Concerns of Imbalance and Questions of “Catch a Falling Knife”

• Key Risk Points: If whales continue to sell off in large volumes, and institutional fund inflows (such as ETF inflows) stagnate, the market may plummet due to imbalance. Historical data shows that a small outflow has previously triggered significant drops (a 2% outflow in 2018 caused a 74% drop, and a 9% outflow in 2022 caused a 64% drop).
• Critics warn: Institutional entry provides whales with the long-desired “large-scale exit liquidity”, and if the cryptocurrency market sentiment turns, it may ultimately be retail investors and pension holders who bear the losses.
• “The long-standing goal has always been to make Bitcoin an asset favored by institutions, thereby providing whales with substantial exit liquidity to cash out.” — Hilary Allen, professor at the Washington College of Law, a long-time skeptic of cryptocurrency.

🔮 Future Outlook: Will the New Normal Continue?

• Despite the risks, most opinions suggest that the trend of shifting from anonymous Whales to institutional allocation may continue, supporting the current market dynamics.
• “This state may last for a long time—perhaps even years… Bitcoin resembles an asset with an annualized return of 10%-20%. Its essence is truly changing.” — 10x Research CEO Markus Thielen
• Bitcoin miner MARA Holdings CEO Fred Thiel holds a different view: “We are approaching the market peak… but I personally believe that today’s market dynamics are very different.”

💎 Key Points Summary

• Bitcoin whales reduce holdings (500,000 coins +/$50 billion +) and institutions aggressively build positions (ETF/listed companies) form a hedge.
• Bitcoin volatility has dropped to a nearly two-year low, and the price breakthrough is weak.
• Bitcoin ownership structure is rapidly institutionalized, with institutions controlling about 1/4 of the circulating supply.
• Bitcoin attributes are shifting from high-risk speculative assets to long-term allocation assets, with expected returns stabilizing (annualized 10-20%).
• Main risks: Whale sell-off and institutional inflow stagnation leading to imbalanced crashes; beware of whales using institutions as “exit liquidity.”
• This institution-led new market structure may last for years, marking a fundamental change in the essence of Bitcoin.