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This Whale Trend Indicates a Flood of Retail Investors Will Soon Launch Bitcoin Higher

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  • Bitcoin’s price action as of late is finally beginning to reflect the fundamental strength incurred throughout the past several months
  • Virtually all on-chain metrics are currently playing in bulls’ favor, while other fundamental developments – like the adoption of BTC as a reserve asset – also give it a boost
  • This fundamental strength may be what helped lead the cryptocurrency up from recent lows of $9,900 to highs of $11,700 that were tapped just days ago
  • The cryptocurrency is now caught within a bout of consolidation as it struggles to surmount its $11,600 resistance
  • That said, one trend seen while looking towards Bitcoin whale activity indicates that a flood of retail investors may soon enter the market

Bitcoin and the entire crypto market have, so far, seen a quiet day of trading. BTC has mainly been ranging around the mid-$11,000 region, while altcoins all see similar consolidation phases.

The latest push higher that helped drive Bitcoin’s price to its current levels came about directly after news broke of Square buying $50 million worth of BTC to hold on their balance sheets as a reserve asset.

This news seemed to spark the momentum that the crypto had been losing, ultimately helping to lead it all the way up to its recent highs of $11,700.

One trend seen while looking towards whale activity does seem to indicate that retail investors are about to flood into the market.

Bitcoin’s Price Gains Stable Uptrend 

At the time of writing, Bitcoin is trading down just over 1% at its current price of $11,420. This is around where it has been trading throughout the past couple of days.

It is important to note that both bulls and bears have largely reached an impasse in the time following the cryptocurrency’s surge up to highs of $11,700 earlier this week.

Because bulls have gained control of the crypto’s mid-term trend, there’s a strong possibility that further upside is imminent in the near-term, but it does face some heavy resistance at $11,600.

This Trend Amongst Large BTC Buyers Indicates a Flood of Retail Investors is Coming 

One trend seen while looking towards so-called Bitcoin whales indicates that retail investors are rapidly entering the market.

While referencing Glassnode data, Unfolded explained that a decline in the number of Bitcoin whales signals that retail investors are pouring in.

“Historically, the start of a decline in the number of BTC whales has often signified increased interest from retail investors and the beginning of a run up to a market top,” they explained while pointing to the below chart.

Image Courtesy of Unfolded. Data via Glassnode.

This trend – should it persist going forward – could mean that serious dry powder is on the sidelines waiting to be introduced to Bitcoin and the aggregated crypto market.

Featured image from Unsplash.
Pricing data from TradingView.





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Bitcoin

Bitcoin may lose $30K price level if stocks tank, analysts warn

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The ghost of stock market crash is back again to haunt Bitcoin (BTC).

It happened last in March 2020. Back then, the prospect of the fast-spreading coronavirus pandemic led to lockdowns across developed and emerging economies. In turn, global stocks crashed in tandem, and Bitcoin lost half of its value in just two days.

Meanwhile, the U.S .dollar index, or DXY, which represents the greenback’s strength against a basket of top foreign currencies, has now climbed by 8.78% to 102.992, its highest level since January 2017.

The huge inverse correlation showed that investors dumped their stocks and Bitcoin holdings and sought safety in what they thought was a better haven: the greenback. 

More than a year later, Bitcoin and stock markets again wrestle with a similar bearish sentiment, this time led by a renewed demand for the U.S. dollar following the Federal Reserve’s hawkish tone.

Namely, the U.S. central bank announced Wednesday it will start hiking its benchmark interest rates by the end of 2023, a year earlier than planned.

Lower interest rates helped to pull Bitcoin and the U.S. stock market out of their bearish slumber. The benchmark cryptocurrency jumped from $3,858 in March 2020 to almost $65,000 in April 2021 as the Fed pushed lending rates to the 0%-0.25% range.

Meanwhile, the S&P 500 index rose more than 95% to 4,257.16 from its mid-March 2020 peak. Dow Jones and Nasdaq rallied similarly, as shown in the chart below.

Bitcoin, Nasdaq Composite, S&P 500, and Dow Jones rose in sync after March 2020 crash. Source: TradingView.com

And this is what happened after the Federal Reserve’s rate-hike announcement on Wednesday…

Bitcoin and the US stock market plunged after the Fed’s rate hike update. Source: TradingView.com

Meanwhile, the U.S. dollar index jumped to its two-month high, hinting at a renewed appetite for the greenback in global markets.

U.S. dollar index jumped up to 2.06% after rate hike announcement. Source: TradingView.com

Popular on-chain analyst Willy Woo said on Friday that a stock market crash coupled with a rising dollar could increase Bitcoin’s bearish outlook. 

“Some downside risk if stonks tank, a lot of rallying in the DXY (USD strength) which is typical of money moving to safety,” he explained. 

Michael Burry, the head of Scion Asset Management, also sounded the alarm on an imminent Bitcoin and stock market crash, adding that when crypto markets fall from trillions, or when meme stocks fall from billions, the Main Street losses will approach the size of countries.

“The problem with crypto, as in most things, is the leverage,” he tweeted. “If you don’t know how much leverage is in crypto, you don’t know anything about crypto.”

Burry deleted his tweets later.

Some bullish hopes

Away from the price action, Bitcoin’s adoption continues to grow, an upside catalyst that was missing during the March 2020 crash.

On Friday, CNBC reported that Goldman Sachs has started trading Bitcoin Futures with Galaxy Digital, a crypto merchant bank headed by former hedge fund tycoon Mike Novogratz. The financial news service claimed that Goldman’s call to hire Galaxy as its liquidity provider came in response to increasing pressure from its wealthy clients.

Related: Hawkish Fed comments push Bitcoin price and stocks lower again

Damien Vanderwilt, co-president of Galaxy Digital, added that the mainstream adoption would help Bitcoin lower its infamous price volatility, paving the way for institutional players to join the crypto bandwagon. Excerpts from his interview with CNBC:

“Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.”

Earlier, other major financial and banking services, including Morgan Stanley, PayPal, and Bank of New York Mellon, also launched crypto-enabled services for their clients.

Is Bitcoin in a bear market? 

Referring to the question “are we in a bear market?” Woo said that Bitcoin adoption continues to look healthy despite the recent price drop. The analyst cited on-chain indicators to show an increasing user growth and capital injection in the Bitcoin market.

He also noted that the recent Bitcoin sell-off merely transported BTC from weak hands to strong hands. 

7-day moving average of coins moving between strong and weak hands. Source: Willy Woo

Woo reminded:

“My only concern for downside risk is if we get a major correction in equities which will pull BTC price downwards no matter what the on-chain fundamentals may suggest. Noticing USD strength on the DXY, which suggest some investors moving to safety in the USD.”