Whenever a large transaction occurs in the blockchain, people become curious about what is going on. Some assume that it is the preparation for selling Bitcoin by a whale, whereas some think that it is a big investor purchasing Bitcoin. The reality is that a transaction alone is not enough to give us the complete picture.
BTC transactions are just a recording of transactions between addresses. It does not tell us anything about the cause for the transaction or even who controls the addresses. This may mean that a large transaction may be a result of paying someone, transferring Bitcoin from one wallet to another under control of one entity, or moving funds between various services.
In Bitcoin, there is something called unspent transaction outputs or UTXOs. Transactions have their inputs spent when they are created, but their outputs are generated. Thus, a transaction can have various inputs and outputs, which also may include returning the remainder of the transaction back to the sender's address.
Another good example is an exchange wallet. When the cryptocurrency exchange transfers Bitcoin to its wallets, the transfer can be recorded on the blockchain even without a client's purchase or sale of the coin on the exchange.
It is also true about the case when a person transfers his Bitcoin from one personal wallet to another. The blockchain will record the transfer, but it does not state the owner's intention.
But then how to determine if a large amount of Bitcoin was transferred for selling? There are several ways to do it with the help of on-chain analysis. One way is to find out where the Bitcoin was transferred. It could go to an exchange wallet, but that does not mean that a sale happened. The BTC can stay there or get transferred elsewhere.
What is important to understand when analyzing a large Bitcoin transfer is that there is more to this than just the amount of Bitcoin that was transferred.
When a large transfer is observed on the blockchain, it means that BTC was transferred somewhere. It does not mean that there was a sale.
