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Bitcoin (BTC) has finally managed to secure a new all-time high, but the digital asset has strongly declined near $ 20,000. Analysts in the chain say that a sell off in whales and miners, combined with the $ 20,000 level serving as a resistance level, caused a steep drop.
What led whales and miners to sell Bitcoin?
For whales and high net worth investors, liquidity is the most important factor. As they handle large orders, they need to calculate the slip that their sales orders will cause.
Typically, the best time to sell whales is when there is a peak of euphoria in the market met with high demand from buyers. This allows whales to sell their holdings more efficiently without causing huge volatility.
When Bitcoin’s price officially surpassed its all-time high on Coinbase, caused market sentiment to turn strongly bullish. Shortly thereafter, the whales started selling, resulting in large liquidations on major exchanges.
CryptoQuant CEO Ki Young Ju explained that whale withdrawals were slowing on November 30th. He said:
“I called short-term bearish based on the sale of miners, whale activity on trade and no whale withdrawal. But I knew that enough trading stablecoin reserves would exceed $ 20k by this year. If the ATH rejection occurs, it could be a huge drop as the whales would sell BTC heavily. “
The confluence of whales holding BTC on exchanges, which means increased selling pressure, and the sell-off of miners has amplified the decline in BTC.
Ki also noted that the whales have started depositing Bitcoin back into exchanges, which happens when the whales want to sell their holdings.
The whales are settling $ BTC
+ The miners are selling $ BTC
+ No exchange levy from whales
+ $ 20K rejection
= Huge pullback ($ 19.9k -> $ 18k) https://t.co/F1n7ypl4kT pic.twitter.com/NnJJxzIcAV– Ki Young Ju 주기영 (@ki_young_ju) December 1, 2020
Is the current recovery just a dead cat bounce?
The price of BTC recovered quickly after falling to around $ 18,200, climbing above $ 19,400 within hours.
The rapid recovery probably occurred due to the nature of the decline. As the price fell, the exchanges saw long cascading liquidations. As such, BTC likely fell stronger than it would have had if it weren’t for the big liquidations.
The recovery was just as intense on the upside for this reason. Late short sellers may have gotten aggressive with the decline in BTC, leading to a near-term short-term tightening.
In the short term, Bitcoin could see two main scenarios. First, it could consolidate above $ 19,000, which would allow the derivatives market to find composure and open interest to rebuild.
Secondly, BTC may continue to fall as traders expect a blow-off high after hitting the all-time high.
But the macro outlook on Bitcoin still remains very optimistic. Scott Melker, a cryptocurrency trader, pointed out that the November monthly candle closed at an all-time high of BTC, which paints a long-term positive picture for BTC. He She said:
“Last month closed just at the previous monthly close of the highest candle of all time. This month ended at its all-time high. Really flawless graph. “
In the short term, the key support levels for Bitcoin are $ 18,200, $ 17,700 and $ 16,200. There are still large clusters of whales in these areas, which could cause a backlash from buyers.
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