Private Bitcoin Transactions Triple, Driven by Whales, ETFs, and MicroStrategy: Analyst Insights

The volume of private Bitcoin transactions using CoinJoin has surged by three times since 2022, according to a recent analysis by CryptoQuant. This sharp increase in private transactions is largely attributed to significant Bitcoin accumulators, such as large institutional investors, Bitcoin exchange-traded funds (ETFs), and prominent companies like MicroStrategy. CryptoQuant's CEO, Ki Young Ju, explained that these Bitcoin whales are increasingly using privacy transactions to move large amounts of Bitcoin to new institutional investors.

CoinJoin is a privacy-enhancing technique that allows users to pool their Bitcoin transactions with others, making it more difficult to trace the origin and destination of funds. The method obfuscates the ownership of unspent transaction outputs, which adds a layer of anonymity to Bitcoin transfers.

Institutional Adoption and Privacy Concerns

According to Young Ju, these privacy-focused transactions are not driven by illicit activity but rather by institutional demand. He dismissed the notion that CoinJoin transactions are primarily used by hackers for money laundering. His argument counters concerns raised by some law enforcement agencies and blockchain analytics firms, who have pointed to the potential misuse of such privacy tools. For example, Chainalysis reported that hackers laundered $2.2 billion in 2024, which still represents just 0.5% of Bitcoin’s total realized market capitalization of $377 billion.

Young Ju highlighted that while public companies must disclose their Bitcoin holdings, there remains a significant amount of Bitcoin held by unidentified “whales” — addresses that have accumulated up to 420,000 Bitcoin, worth over $40 billion. These massive holdings are suspected to be linked to entities like Bitcoin ETFs and custodial wallets.

Who Are the Bitcoin Whales?

The growing speculation around these large, unidentified Bitcoin holders has sparked further intrigue. Some analysts and observers wonder if these whales could be nation-states discreetly building Bitcoin reserves. Others suggest that sanctioned countries might be using privacy transactions to circumvent financial sanctions and mitigate risks associated with international trade. For instance, Russia recently passed legislation allowing foreign trade in Bitcoin and other cryptocurrencies, which could be an indication of state-backed interest in Bitcoin.

Privacy Tools Under Scrutiny

While CoinJoin transactions offer legitimate privacy to Bitcoin users, they have also attracted scrutiny from law enforcement agencies. In April, the U.S. Department of Justice arrested the founders of the privacy-focused Bitcoin wallet service, Samourai Wallet, which incorporates CoinJoin functionality. Authorities seized the Samourai Wallet website, alleging that it had facilitated over $100 million in money laundering activities connected to dark web markets like Silk Road and Hydra.

Similarly, Dutch authorities detained Alexey Pertsev, the creator of the popular crypto mixing tool Tornado Cash, which also uses privacy-enhancing techniques. Pertsev was convicted of money laundering in May 2024, highlighting the global tension between privacy tools in crypto and the increasing regulatory pressure to combat illicit activities.

Conclusion

The dramatic rise in private Bitcoin transactions underscores a growing trend in the cryptocurrency market: large institutional players, including Bitcoin ETFs, MicroStrategy, and potentially nation-states, are accelerating their Bitcoin purchases and using privacy mechanisms to transfer large amounts of Bitcoin. While concerns over illicit activity persist, the significant portion of CoinJoin transactions tied to institutional players points to a broader shift in how privacy is handled within the crypto ecosystem. As Bitcoin continues to evolve, the balance between privacy, regulation, and security will likely remain a focal point for both the industry and law enforcement agencies worldwide.