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Record-high Bitcoin whale population is bullish for BTC price — Analyst

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In recent weeks, the number of Bitcoin (BTC) addresses holding over 1,000 BTC — often referred to as “whales” — rapidly increased to around 2,088. This trend started shortly after Bitcoin price crashed to $3,600 in March.

The data is relevant because historical data suggests that aggressive accumulation by large investors is typically a sign of a new bull cycle.

Throughout the past six years, Bitcoin has seen periods of inverse correlation between whale accumulation phases and BTC price. Whenever the number of addresses holding substantial amounts of BTC dropped off, the price of BTC declined.

Positive on-chain data sparks optimism for Bitcoin

Whales tend to follow areas that have the most liquidity, as they deal with large amounts of Bitcoin. As such, when whales believe the price of BTC has reached a top, they sell quickly, causing the number of large addresses holding BTC to drop.

As an example, in early 2018, after the price of Bitcoin hit $20,000, the number of Bitcoin addresses with 1,000 BTC ($11 million) declined to levels unseen since 2014.

Another on-chain metric that is not limited to whales suggests investors are generally accumulating more Bitcoin than before. Glassnode found that addresses that never spent BTC but have been active in the last seven years increased noticeably since 2018. The researchers wrote:

“There are over 500,000 #Bitcoin “accumulation addresses” holding a total of 2.6M $BTC (~14%) Accumulation addresses: have 2+ incoming txs [transactions], never spent BTC, were active in the past 7 years (accounting for lost coins), exchanges and miners are excluded.”

The number of Bitcoin accumulation addresses. Source: Glassnode

While both data points are acknowledged as bullish trends, it is also important to note that they have risen consistently over the past ten years.

It is difficult to determine whether this data bodes well for the near-term price cycle of BTC. However, it does suggest a healthy long-term growth trend for Bitcoin.

Fundamentals supplement strong on-chain data, what’s next?

In addition to data which suggests an accumulation phase for Bitcoin, various fundamental factors signal stability in various industries.

The hash rate of the Bitcoin blockchain network is continuously achieving record highs in spite of the May 11 halving. This indicates that the price point of BTC is high enough for miners to remain profitable.

Balance of Bitcoin and Ether on exchanges. Source: Glassnode

Balance of Bitcoin and Ether on exchanges. Source: Glassnode

Trading activity across top exchanges and regulated futures markets like CME also remains high. But, the reserves of BTC on exchanges have dropped significantly in comparison to previous bull cycles.

The trend of high trading activity and a low BTC reserves hint that investors are likely buying BTC on exchanges rather than selling. Rafael Schultze-Kraft, the chief technical officer at Glassnode, said:

“Exchange balances YTD change: BTC: -9.6%, ETH: +10.4%.”

Since most retail investors use spot cryptocurrency exchanges, while institutions use regulated investment vehicles and some whales use over-the-counter exchanges, data suggests that both retail and whales appear to be accumulating Bitcoin.





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3 reasons why Bitcoin price has not been able to rally back above $40K

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The ongoing story for the past couple of months in the cryptocurrency market has been confusion on whether Bitcoin (BTC) is destined for another leg down or is finally ready to break out toward new highs.

Bitcoin’s price history and data from previous corrections suggest that the current struggles for the top cryptocurrency could persist for a little bit longer due to the strengthening dollar, the possibility of decreasing economic stimulus and a slew of technical factors connected to Bitcoin’s price action.

A strong dollar threatens Bitcoin’s recovery

According to data from Delphi Digital, one of the biggest factors placing strain on risk assets around the globe is the strengthening U.S. dollar which appears to be attempting a trend reversal after falling below 90 in late May.

DXY 1-day chart. Source: TradingView

Rising dollar strength put a halt to the year-long uptrend in the 10-year US Treasury yield which is also a reflection that the economic expansions seen in the first half of 2021 are beginning to lose steam and there is a threat that a new wave of Covid-19 infections threatening the global economic recovery.

Fractals and the Death Cross suggest the correction is not over yet

The short-term outlook for Bitcoin remains bearish as previous instances of the “Death Cross,” which appeared on BTC’s chart in late June, have been followed by a corrective period that can last for nearly a year.

Bearish crossover of the 50 day and 200-day MA. Source: Delphi Digital

According to the analysts at Delphi Digital, the 12-month moving average is being tested as support, and a dip below this level would signal further downside for BTC price.

Bitcoin price testing the12-month moving average. Source: Delphi Digital

The 12-month moving average has been a key support level for Bitcoin historically, so how the price performs near this level could dictate whether the current uptrend remains intact.

Related: El Salvadorians take to the streets to protest Bitcoin law

Overall, caution is warranted for traders because low volumes have historically led to higher volatility when fewer open bids can lead to rapid price fluctuations.

As explained by Kevin Kelly, a certified financial analyst at Delphi Digital, “the short-term outlook turns quite a bit more bearish if and when we break those key levels” near $30,000.

Kelly said:

“I don’t necessarily think that we will see as nearly as significant of a drawdown as we did in say, post-December 2017, early 2018, and into the end of that year. But I do think, just given the structure of the market, that we could potentially be in for a bit more short-term volatility and potentially some more headwinds here, in the near term.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.