Privacy-focused Bitcoin transactions have tripled in volume over the past two years, according to CryptoQuant’s CEO Ki Young Ju. The rise in these transactions is drawing attention to the practices of high-value Bitcoin holders, or "whales," and their potential motivations.

CoinJoin Transactions Triple Since 2022

Data reveals a significant uptick in the use of CoinJoin, a transaction-mixing service that enhances Bitcoin privacy by combining multiple payments into a single transaction. According to blockchain analytics, the annual average of CoinJoin transactions has increased threefold since 2022.

While some critics suggest that this trend is linked to illicit activities, such as hackers laundering stolen funds, the numbers paint a more nuanced picture. Reports from Chainalysis indicate that total hacking losses in 2024 amounted to $2.2 billion, representing less than 0.5% of Bitcoin's $377 billion in Realized Cap inflows.‍

Whales and Institutional Adoption

Young Ju have pointed out that Bitcoin whales are increasingly using privacy transactions. This activity is linked to the transfer of funds to institutional investors, including those associated with ETFs, MicroStrategy, and custodial wallets.

In 2024 alone, approximately 1.55 million BTC flowed into accumulation addresses, highlighting significant interest from large-scale investors. However, beyond disclosed holdings by institutions, an estimated 240,000 to 420,000 BTC remains unaccounted for. The identity of the entities or individuals behind this accumulation remains a mystery, fueling speculation about their intent and impact on the market.‍

Implications for the Bitcoin Ecosystem

The rising use of privacy-enhancing tools underscores a growing tension in the cryptocurrency space. On one hand, privacy is a core value of Bitcoin, providing users with greater control over their financial data. On the other hand, the increased use of CoinJoin and similar services raises concerns among regulators and watchdogs, who fear these tools may facilitate illicit activities.