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The price of Bitcoin (BTC) is going through a volatile period. After reaching $ 14,100 for the first time since 2017, a sharp decline followed. However, key data on the whale chain and clusters show that individual investors with high net worth hold their positions.
This trend shows that whales are not expecting a sharp contraction in the near term. A low level of whale activity is a positive metric following a large uptrend. It shows that the whales are not yet interested in selling BTC and are likely anticipating a larger rally.
In the short term, Bitcoin’s support areas lie at $ 12,900 and $ 13,300. The stability of the dominant cryptocurrency above the two levels despite various macro factors is an optimistic trend. Elections in the US are underway, and while BTC has seen a 4% decline, it has been relatively resilient.
Investors look confident
Two key indicators on the chain show that whales and retail investors, in general, are not actively selling Bitcoin. First, BTC’s estimated leverage ratio shows that trading in the derivatives market is not going down. This shows that investors are not proactively closing their positions or trades amid the uncertainty surrounding the US presidential election.
However, following the publication of the election results, BTC’s high estimated leverage ratio poses a risk of increased volatility. Ki Young Ju, CEO of CryptoQuant, told Cointelegraph: “BTC’s estimated leverage ratio on derivatives trading is on the rise until election day. It could cause high volatility on the BTC price due to cascading liquidations. “
The term “cascade settlements” refers to a situation in which futures contracts are settled consecutively over a short period. For example, if short sellers are betting more and more against Bitcoin, but the price of BTC rises, it can cause short liquidation one after another. When this happens, it causes cascading liquidations, resulting in increased volatility.
Secondly, there are fewer whales that sell on the stock exchange in the US that are typically used by whales, such as Coinbase Pro and Gemini. According to data from CryptoQuant, there is a low influx of Bitcoin into exchanges in the United States, which means there is less risk of short-term selling by whales in the near future. Ju explained:
“Whales in US spot exchanges are not active for now. The average spot trade influx is the average amount of bitcoin deposited on spot exchanges, including US exchanges such as Coinbase Pro, Gemini, Bittrex, and others. It is useful to see the short-term risk of whale dumping. “
On October 12, for example, inflows into US stock exchanges suddenly increased in the danger zone. As soon as they did that, Bitcoin plummeted in a short time. For the past two weeks, currency inflows have been significantly below the danger zone. This reduces the likelihood of a sudden correction in the short term.
The whale clusters show that Bitcoin is oversold
Whalemap found that there are two short-term technical levels that serve as important areas. Based on the whale clusters, the $ 12,987 and $ 13,650 levels are critical. Whale clusters form when the newly purchased BTC stays in place. Clusters show the areas where whales have previously bought Bitcoin and are often considered support levels.
As the price of Bitcoin is trading below $ 13,650 as of November 3, claiming $ 13,650 and staying above would confirm this as a support level. So in the short term, a rise over $ 13,650 is important for buyers to continue the rally. Bitcoin has established a positive technical trend over the past week by defending the $ 13,000 macro support area. As long as BTC stays above the $ 13,000– $ 13,500 range, the short-term bullish trend is intact.
In technical terms, Whalemap explained that Bitcoin’s daily chart indicates that the cryptocurrency is oversold. The Relative Strength Index, or RSI, is an indicator that measures Bitcoin’s momentum and whether it is overbought or oversold. On the daily candlestick log chart, the RSI shows that BTC is currently oversold, Whalemap She said. “The monthly candle swept the 2019 high and closed below. Blue areas [$16,000] they mean important macro lies. I expect the big boys to make a profit there. “
Based on the daily chart, the $ 13,000– $ 14,000 range is an area of interest for sellers. Therefore, if Bitcoin remains stable above $ 13,000 and recovers $ 14,000, the next resistance level is $ 16,000. For the short-term bullish case of BTC to strengthen, the daily chart marking a close above $ 14,000 is crucial in November. In that case, as in December 2017, BTC could reach a new all-time high in December.
Two main variables for the short-term price trend of Bitcoin
Since mid-October, Bitcoin miners have been selling larger and larger quantities of Bitcoin. During the rainy season in northern China, which usually begins during the fall, miners increase their ability to harness cheaper electricity. Since areas like Sichuan are dependent on hydroelectricity, the rainy season results in lower electricity costs. But as the rainy season draws to a close, many miners abruptly stop mining BTC.
According to data from ByteTree, miners have been selling a lot of Bitcoins in the past week. Over the past seven days, there has been a change in miners’ net inventory of negative 1,060 BTC, meaning miners have sold 1,060 BTC more than they mined, putting significant selling pressure on the market. As a result, Bitcoin saw its second largest negative mining difficulty adjustment change in history when miners stopped mining BTC in bulk. Glassnode he wrote:
“We just observed the second largest negative adjustment to #Bitcoin’s mining difficulty in history: -16%. It exceeded the variation of -15.9% in March of this year. The only other difficulty when it saw a larger downward adjustment (-18%) was over 9 years ago, in October 2011 “.
There is a possibility that lesser selling pressure from miners could bolster Bitcoin’s momentum. On top of the likely drop in miners selling BTC, the US election will begin to have a bigger impact. Analysts, including Alex Krüger, said a Democratic congressional sweep or the election of Joe Biden would likely encourage sentiment around Bitcoin.
If Biden is elected, Krüger She said that gold, Bitcoin and safe-haven assets are likely to rise in value in the wake of significant uncertainty in the stock market, which would prepare for additional regulation and potentially higher tax rates.
If President Donald Trump is re-elected, it would cause risky assets to rally, which could cause BTC to rise as well. Barry Silbert, CEO of Grayscale – a cryptocurrency investment firm – She said that both a Trump and Biden victory would benefit Bitcoin.
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