Explanation of Bitcoin's $100K surge: It's not due to retail demand, but rather a liquidity crunch
In the world of cryptocurrency, the actions of Bitcoin whales – large-scale investors holding a significant amount of the digital asset – can have a profound impact on the market. As these whales consider booking profits, several outcomes could emerge, with the current supply shortage and high demand from institutions playing a crucial role.
Price Stability and Absorption
Institutional buyers have been absorbing substantial whale sales in recent months, helping to stabilise Bitcoin's price. A notable example occurred in July 2025, when a $9 billion whale transaction had minimal impact on the price due to institutional demand. This trend suggests that if whales continue selling, institutional buyers might absorb the liquidity, maintaining price stability.
Market Psychology and FOMO
If whales sell, it could trigger FOMO (Fear of Missing Out) among retail investors, leading to increased buying pressure to fill the gap left by whales. However, this could also lead to short-term volatility as retail investors react more emotionally to market changes.
Supply and Demand Balance
The current supply shortage and high institutional demand could keep Bitcoin prices buoyant. If demand continues to outpace supply, prices might remain stable or even rise despite whale selling.
Potential Risks and Opportunities
Risks
A liquidity crunch could occur if old whales begin selling en masse at higher price levels, or if new whales panic and sell below critical support levels. This could lead to a drop in price if not enough buyers are present to absorb the selling pressure.
Opportunities
Whale sales can redistribute Bitcoin to new investors, potentially increasing market participation and driving future growth. Swing trading opportunities could also arise from the volatility caused by whale selling and institutional buying.
In summary, while whale selling could lead to short-term volatility, the strong institutional demand and ongoing supply shortage are likely to keep Bitcoin's price stable or even drive it higher if the market remains optimistic about future growth. However, careful monitoring of market psychology and liquidity conditions is crucial to predict the exact impact.
At press time, the Whale's exchange balance is -73k BTC, and the Mega Whale's balance is -19k BTC. The declining liquidity of Bitcoin in the spot market has contributed to the supply shortage, with Bitcoin's average Exchange Netflow on centralized exchanges having been negative almost every day since late February 2024.
Since the approval of BTC Spot ETFs in early 2024, Bitcoin held by ETFs has exceeded 1.3 million BTC, worth over $149 billion. The demand from institutions and investors indirectly through Spot ETFs has played a significant role in pushing BTC to its recent ATH. Bitcoin whales have shown restraint in selling, as evidenced by the Whale to Exchange Balance Change remaining negative for the past 3 months.
The sustained rally of Bitcoin is not due to retail speculation but a deepening supply crisis. Bitcoin's scarcity has surged significantly, reaching a new high, which is a key driver for a sustained upward momentum. If the prevailing demand across major players persists, Bitcoin may reclaim the $117k resistance and target a new ATH. However, if large entities turn bearish and start selling, the correction will deepen, and BTC could seek support around 110,5722.
The Stock-to-Flow model projects a theoretical BTC price of $3.2 million, but the immediate future remains uncertain, with the market dynamics constantly evolving. As always, investors are advised to conduct thorough research and consider their risk appetite before making investment decisions.
- Institutional buyers have been absorbing significant whale sales, helping to stabilize Bitcoin's price, as seen in the example of a $9 billion whale transaction in July 2025 that had minimal impact on the price due to institutional demand.
- If whales continue selling, the ongoing supply shortage and high institutional demand could keep Bitcoin prices buoyant, as demand might outpace supply, leading to prices remaining stable or even rising.
- A liquidity crunch could occur if old whales begin selling en masse at higher price levels or if new whales panic and sell below critical support levels, leading to a drop in price if not enough buyers are present to absorb the selling pressure.
