On the evening of August 25, the Bitcoin market experienced a sudden change, with the price plummeting by 2.2% in just 9 minutes, instantly dropping to $112,174, and a market value evaporating by $45 billion. This sudden crash caught countless investors off guard. According to cryptocurrency analyst Willy Woo, the culprit behind this crash was actually those OG (original) whales who bought Bitcoin at $10 in 2011.

Cold Wallet Recovery: Underestimated Liquidity Risk

For a long time, the market has generally believed that the Bitcoin wallets that have not moved for over 5 years have long lost their keys, and this portion of Bitcoin is considered to have exited the actual circulation. Therefore, when predicting Bitcoin's price expectations, the market generally analyzes based on an actual circulating supply of approximately 7.1 million Bitcoins, without incorporating the share of these long-dormant wallets into liquidity considerations.

However, recent market performance has shattered this perception. In fact, there are a large number of cold wallets that have been dormant for years, whose owners are still alive and have begun to become active in the market. These dormant whales have quietly awakened, bringing a huge impact to the market, catching it off guard.

- Whale Sell-off Overview: Bitcoin Falters, Ethereum Benefits

Since August 16, a whale has begun to take significant action. He transferred 24,000 Bitcoins (worth about $2.7 billion at the time) to the Hyperliquid platform and made large-scale purchases of Ethereum (ETH). Under his operations, the Ethereum holdings peaked at 551,861 (worth about $2.6 billion at the time), making a profit of up to $185 million through ETH/BTC trading. However, after the whale closed out the long position, the market direction suddenly changed, triggering a wave of sell-offs, and the Bitcoin price fell accordingly.

In addition, there are still 152,874 Bitcoins remaining in the whale's cold wallet. Meanwhile, another big player has also begun to significantly go long on Ethereum, selling 670 Bitcoins (worth about $76 million at the time). Since April, the price of Ethereum has risen by 220%, beginning to attract a large influx of funds that originally belonged to Bitcoin.

Market Unprepared: Whale Recovery Triggers Chain Reaction

Whether retail or institutional investors, it seems that neither was prepared for this sudden whale recovery. The market has long held a misperception about these long-dormant wallets, leading to a disruption in market expectations when faced with large-scale sell-offs of Bitcoin by whales, who then shifted their investments to Ethereum, causing severe price volatility.

Whales Have Not Exited: Bitcoin May Face Greater Pressure

Fortunately, these whales have not truly exited the market; they have merely chosen to shift their holdings to Ethereum and reduce their Bitcoin holdings. If these whales continue to recover and stop shifting holdings and instead cash out on a large scale, the Bitcoin market may face a more severe situation. At that time, not only will retail investors struggle to cope, but even the market's price expectations for Bitcoin may need to be reassessed.

This Bitcoin crash event triggered by OG whale sell-offs has undoubtedly sounded the alarm for the market. The potential influence of those dormant cold wallets should not be underestimated. In the cryptocurrency market, historical legacy issues intertwine with emerging trends, and every market fluctuation may hide unforeseen risks and opportunities. Investors must remain vigilant and pay attention to market dynamics in order to navigate the ever-changing market steadily.

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