On the day of September 4, the price of Bitcoin (BTC) suffered an abrupt loss of 10%. Following the contraction, the crypto market climate has become visibly cautious, while the Cryptocurrency Fear & Greed Index reported “fear” for the first time since July.
A huge buy order for Bitcoin at $ 8,800 on Bitfinex. Source: Cole Garner
Despite this, market data suggests that whales are preparing to accumulate Bitcoin at the $ 8,800 support level, so a repeat of the collapse seen on March 13, when BTC dipped to $ 3,600, seems unlikely.
How do you explain the decline in Bitcoin, and why are whales ready to buy?
Analysts attribute the Bitcoin correction primarily to the sell-off by miners. Prior to the drop, analyst firm CryptoQuant reported that mining pools were preparing to sell BTC.
After tracking the outflows from the main pools, the data shows that miners have moved unusually large amounts of Bitcoin to exchanges. A little later, Bitcoin’s price began its fall, eventually dropping below the $ 10,000 level. The researchers they explained:
“Since yesterday, miners have been moving unusually large amounts of #BTC. #Poolin, #Slush, #HaoBTC took Bitcoin from mining wallets and sent part of it to exchanges. “
When the Bitcoin trend begins to chart a reversal, it tends to extend to the furthest support or resistance level. On March 13, for example, BTC plummeted rapidly to $ 3,600 followed by a notable rebound. From April to September, Bitcoin recovered from $ 3,600 to more than $ 12,000.
Therefore, perhaps the whales are expecting Bitcoin to reach lower support levels, including the $ 8,800 level.
“It’s a pleasure to see you again, Bitfinex whale,” commented today on-chain analyst Cole Garner. “Smart money has ready buy orders at $ 8,800. I think the minimum will probably be in that area.”
The data could indicate that the whales anticipate a further pullback in the near term, although the move will not be as far-reaching as the massive corrections Bitcoin has seen in the past.
Since March, the price of Bitcoin has risen by 247%. As a result, the recent correction probably came as no surprise to many traders. Such as reported yesterday, Raoul Pal, CEO of Global Macro Investor, he has declared that 25% -40% pullbacks in a bull market are typical for Bitcoin:
“In post-halving bullish cycles, Bitcoin can often sustain losses of 25% (even over 40% in 2017), confusing short-term traders (or giving swing traders short opportunities). All the past scenarios proved to be a buying opportunity. Dollar-cost averaging opportunities on the horizon? “
What does the future hold for BTC?
Whalemap, the whale data resource, has explained that several “HODLers” sold Bitcoin in panic during the decline in the asset. Given the intensity of the movement, BTC’s rapid pullback may have taken investors by surprise:
“Yesterday we saw a lot of panic selling from HODLers who bought near the highs. Their strategy seems to be: buy high and sell low. “
Yesterday’s correction is the result of a combination of whale profit-taking and investor panic-selling, which could increase the chances of a decline in volatility in the near term.
A map of whales buying and selling BTC. Source: Whalemap
Michaël van de Poppe, trader presso l’Amsterdam Stock Exchange, commented that Bitcoin could be close to forming a low. Anticipating a period of consolidation, Van de Poppe said he was convinced that this contraction in the markets might not mark the end of the current “altseason”:
“In my view, we are close to forming a low on $ BTC in these areas, merging with the gap on the CME. Take advantage of bounces actively as a rising low is needed to confirm support. The crazy altseason continues over the next few months. “
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