According to CryptoQuant’s CEO, Ki Young Ju, this uptick is linked to growing institutional interest, including Bitcoin ETFs, major accumulators like MicroStrategy, and unidentified large-scale Bitcoin holders, known as “whales.”

The Surge in Private Transactions: A Strategic Shift

Since 2022, private Bitcoin transactions have tripled. This dramatic increase comes as large institutional players have ramped up their purchases. CryptoQuant’s Ki Young Ju explains that these whales frequently utilize privacy features such as CoinJoin to transfer Bitcoin to new institutional investors. The privacy mechanism helps obfuscate the origin and destination of Bitcoin, a move often associated with avoiding scrutiny and protecting the identities of the investors involved.

The rising trend in private Bitcoin (BTC) transactions. Source: Ki Young Ju via X

Despite concerns over the potential misuse of CoinJoin by criminal actors, Ju dismissed claims that the tool is primarily used for laundering stolen funds. In fact, Chainalysis reported that Bitcoin hacking losses in 2024 amounted to $2.2 billion, which is a small fraction of Bitcoin’s realized market cap, highlighting that only a minor portion of Bitcoin’s flow is tainted by illicit activities.

While the narrative around privacy and Bitcoin continues to evolve, the mainstream focus remains on the institutional forces at play.

Institutional Giants and the Rise of Bitcoin ETFs

Institutional players have been aggressively accumulating Bitcoin over the past year, spearheaded by Bitcoin ETFs, MicroStrategy, and government-backed entities. According to CryptoQuant, a total of 31% of all known Bitcoin holdings are now controlled by institutional investors, up from just 14% in 2023. The lion’s share of this accumulation has been driven by spot Bitcoin ETFs, which have tapped billions in inflows from traditional financial markets. Inflows into mainstream trackers such as BlackRock’s iShares Bitcoin Trusts have topped $1.4 billion in December alone; the importance of these financial instruments is already set deep in the dynamics of Bitcoin’s evolution.

In particular, one large Bitcoin whale is the Virginia-based business intelligence firm MicroStrategy. With a staggering total of over 440,000 BTC in its treasury, the company now holds about 2% of the total circulating supply of the apex cryptocurrency, valued above $46 billion. The strategy to get exposed to Bitcoin instituted by MicroStrategy’s founder, Michael Saylor, has become sort of a blueprint for many other institutional investors, with firms such as Metaplanet also joining the tide of increased BTC holdings.

Mysterious Whales and Unidentified Large-Scale Purchases

A particularly intriguing aspect of the current Bitcoin landscape is the growing influence of unidentified whales. CryptoQuant’s CEO revealed that between 240,000 and 420,000 BTC have been purchased by unknown entities this year alone. This raises questions about the identity of these massive holders, especially as the market’s focus shifts to large institutional purchases and ETF-backed investments.

Source: X

While speculation abounds about whether nation-states or sanctioned entities are involved, the lack of transparency around these whales remains a point of concern for the broader crypto community. Some analysts suggest that these unknown whales could be foreign governments or state-backed entities discreetly accumulating Bitcoin as a hedge against economic instability or to bypass sanctions.

The Role of Governments in Bitcoin Accumulation

Governments have emerged as significant players in the Bitcoin market, with the U.S., China, and El Salvador leading the pack. The United States has over 198,000 BTC, with the majority of this stock coming from seizures made on the Silk Road online marketplace. Meanwhile, China is estimated to maintain upwards of 190,000 BTC, despite having banned all things cryptocurrency-related, reinforcing the notion that involvement in Bitcoin is not solely limited to financial policy but also surveillance and asset accumulation by a government.

Bitcoin (BTC) price chart. Source: Bitcoin Liquid Index (BLX) via Brave New Coin

It could grow even more. Under a proposed Bitcoin Act of 2024 from Sen. Cynthia Lummis, a strategic reserve would be established with ambitions of amassing up to 1 million BTC by 2030—that is roughly 5% of the digital supply in Bitcoin, with the US being one of the big whales in this ocean of digital assets.

Privacy and the Regulatory Backdrop

The rise in private Bitcoin transactions, particularly through CoinJoin, has drawn the attention of regulators and law enforcement agencies worldwide. The U.S. Department of Justice’s recent attack on privacy-conducive tools such as Samourai Wallet and Tornado Cash illustrates growing regulatory concern with the question of Bitcoin privacy.

These tools enable users to mask the source and recipient of their Bitcoin transactions, which have been linked to illegal activities like money laundering and dark web market financing. Authorities have taken a tougher stance in the crackdown on features of this nature that would enable such practices. The arrest of Tornado Cash creator Alexey Pertsev and the seizure of the website for Samourai Wallet signal increasing scrutiny for privacy-centric Bitcoin services.

However, for researchers, features such as CoinJoin are fundamental to the effort of keeping Bitcoin decentralized. In this manner, while governments and large corporations continue compacting Bitcoin, the debate over surfacing privacy versus surveillance is likely to increase.

MicroStrategy and the Corporate Adoption of Bitcoin

MicroStrategy’s Bitcoin holdings are not just a financial investment; they represent a broader trend of corporate adoption. The firm’s accumulation of Bitcoin as an asset for the treasury encouraged the likes of Tesla and Metaplanet, among the other corporations, to jump in. The trend development is now so much deepening among the public companies concerning Bitcoin adoption that it draws numerous investment vehicles, ranging from the new Bitwise Bitcoin Standard Company ETF, which invests into companies holding huge quantum amounts of Bitcoin.

Source: X

The CEO of MicroStrategy, Michael Saylor, has been one of the most vocal advocates for Bitcoin to date, which he has said will rise as high as $13 million by 2045. Though the forecast sounds overly optimistic to some, others say that Saylor’s aggressive Bitcoin buying strategy has already paid off big time for the company.

The Future of Bitcoin: A Polarizing Asset

As Bitcoin continues to evolve, the role of institutional investors, government entities, and privacy features will remain central to the discussion. The increasing control exerted by whales, combined with the growing regulatory scrutiny, suggests that Bitcoin may soon face new challenges. However, with an expanding base of institutional and governmental interest, Bitcoin’s future as a store of value is becoming more firmly entrenched, despite the hurdles it faces along the way.

In this rapidly changing environment, one thing is clear: Bitcoin’s journey is far from over, and the dynamics of its ownership and use will continue to shape its place in the global financial system.