Whales have been selling Bitcoin throughout the weekend, from October 22 onwards. Despite the heightened number of sellers in the market, the dominant cryptocurrency has continuously rallied.
In crypto, the term “whale” refers to a high-net-worth investor who holds a significant number of Bitcoin. Whales typically have a large influence over the market due to the size of their trades.
Exchange Deposits From Whales Increased
According to the data from the on-chain analysis firm CryptoQuant, whales started depositing Bitcoin to exchanges on October 22.
Whales or wealthy investors tend to hold Bitcoin in cold wallets, not on exchanges. The reason for that is because cold wallets are offline wallets that are not connected to the internet. That eliminates the possibility of a security breach or a hacking attempt.
Hence, when whales begin to deposit Bitcoin into exchanges, it often signifies an intent to sell.
In an exclusive interview, CryptoQuant CEO Ki Young Ju said that he expects a small price drop due to the growing selling pressure from whales.
Two days after Ki pinpointed the rising number of Bitcoin deposits from whales, on October 25, the price of BTC dropped nearly 3% in under an hour.
“Historical data shows that every time All Exchanges’ Inflow Mean(24h MA) exceeded 2 BTC, the price is likely to be move significantly. To see how much the price moves, we need to look at Exchange Whale Ratio, the top 10 transactions flowing into the exchange divided by the total exchange inflow. Since Exchange Whale Ratio remains low, I expect a small price drop,” Ju explained, on October 23.
Since then, Bitcoin has gradually recovered, steadily climbing towards the $13,300 resistance level once again.
Technical analysts anticipated a pullback in the $13,000 to $13,500 resistance range because it is an area of interest for sellers.
Researchers at Whalemap, who track the activity of Bitcoin whales, also said a key on-chain indicator suggests a profit-taking phase could take place.
“When price is in unexplored territory Moving profits & losses (MPL) serve useful in visualizing when the market is overheated with profit-taking. We seem to be reaching the top of the trendline right now,” they said.
Two Reasons Bitcoin Price Rising Regardless
The typical response of the Bitcoin price to the selling pressure from whales would be a swift pullback. Although BTC saw a price drop, it has immediately recovered from the minor correction.
There are two key reasons Bitcoin might be continuously rising despite the growing exchange deposits from whales.
First, new demand and inflows into the Bitcoin market could be greater than the selling pressure from both whales and retail sellers.
Second, there is a significant level of institutional demand following various high profile events. Particularly after Square SQ , MicroStrategy MSTR , and Stone Ridge’s investments into BTC, the appetite for the dominant cryptocurrency has noticeably risen.
The weekly chart of Bitcoin also indicates a clean breakout of a three-year range. The confluence of technical, macro and fundamental catalysts could be causing the momentum of BTC to strengthen.
Source: Forbes – Money