Bitcoin Accumulation By Retailers At Highest Pace Since FTX’s Collapse

According to onchain data, small-scale retail holders have been accumulating bitcoin (BTC) at the fastest pace since the collapse of FTX, a cryptocurrency exchange. Glassnode’s data indicates that “shrimps” with holdings between 0.1 BTC and 1 BTC have been buying more BTC this week as concerns arise over a potential banking collapse in the United States.


Recent Market Chaos

The recent bank run on Silicon Valley Bank (SVB), bankruptcy of Silvergate, and the closure of Signature Bank have caused fears that the markets, including crypto and bitcoin, would suffer if the government and Federal Reserve failed to intervene. In response to these concerns, the US Treasury Department and Federal Reserve have stepped in to help. The Treasury Department has pledged to bail out depositors in affected banks, while the Federal Reserve has created a funding program and loan facility for distressed banks to withdraw. This has resulted in a $397 billion increase in the Federal Reserve’s total assets in just one week, partially undoing their tightening efforts.

The recent chaos caused a brief de-pegging of the USDC, a stablecoin tracking the USD, which quickly restored its parity after Circle, the issuer, announced its exposure to SVB. This coincided with the expansion of bitcoin and crypto prices, with BTC prices surpassing $24,000 before reaching new Q1 2023 highs of over $27,000 at spot rates as of March 13. As of writing, BTC is trading at $27,464, a 35% increase in the last trading week.


Retail Investors’ Behavior

The recent surge in retailers accumulating BTC could suggest that individuals are viewing the coin as a safe haven asset amid the current banking crisis. With its design as a censorship-resistant, global, and digital currency with a limited total supply of 21 million, proponents believe BTC can serve as a medium of exchange like money or a store of value like gold, especially in times of crisis.

Overall, the expansion of BTC accumulation by retail holders raises concerns about the stability of the banking industry and the potential risks to depositors, but also suggests a growing trust and confidence in bitcoin as an alternative. It remains to be seen how the situation will develop and whether the government’s interventions will effectively mitigate the risks posed to the banking system.