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The price of Bitcoin (BTC) is proving relatively stable around the $ 16,000 level, significantly outperforming both safe haven and risky assets, including gold and stocks. But in the short term, the digital asset faces a major hurdle in the form of whales.
On November 12, the price of Bitcoin reached $ 16,199, a level never seen since the famous 2017 rally. Although BTC dropped to $ 15,600 in a few hours, it quickly recovered and as of this writing it looks like the digital asset will attempt to exceed the intraday maximum.
Bitcoin has shown resilience in excess of $ 16,000, which has historically been a key turning point. Due to the overcoming of this crucial area of BTC, market sentiment around the leading cryptocurrency has become extraordinarily optimistic.
However, this could leave cryptocurrency and the broader market vulnerable to a sell-off by whales. Individual investors with high net worth who hold large amounts of BTC, described as whales, prefer to sell when there is high liquidity.
In most cases, the periods with the greatest liquidity are those when the price of BTC rises with significant market optimism.
Data on the chain suggests that a whale-induced sell-off is likely for BTC
Whales hold more BTC than usual, and there has been an increase in whale deposits on major exchanges
These two figures show that the likelihood of a short-term whale-driven sell-off is high.
When the Exchange Whale Ratio exceeds 85%, it indicates that a correction is likely. CryptoQuant CEO Ki Young Ju explained that 85% is the correction level and 90 is the dumping level for the indicator.
Since the whale exchange ratio is around 85%, Ki said “mass dumping” is not likely, but minor corrections could occur.
This data coincides with the Santiment report which found that the number of large Bitcoin whales reached an annual high.
Santiment analysts have suggested that the number of Whale Bitcoin addresses with over 10,000 BTC reaching 111 is a validation of whale confidence.
While this is true, it also means that the Bitcoin market currently has an unusually higher number of whales. So, if the whales start profiting, it could cause a retreat in the near future. Santiment analysts wrote:
“Are you looking for confirmation that Bitcoin whales are confident in their assets? The number of addresses holding at least $ 10,000 BTC has just hit the 2020 high of 111. Furthermore, those with $ 1,000-9,999 BTC are now just 6 below. ATH of 2,135 portfolios “.
The future is less bright for altcoins
Alternative cryptocurrencies (altcoins) are now in a precarious position due to the current Bitcoin price cycle.
If Bitcoin goes up, it will continue to suck volume out of the cryptocurrency market. As a result, the altcoins would have underperformed against Bitcoin and possibly the US dollar.
Alternatively, if Bitcoin breaks, it could shake the market, which would lead to a major correction in the altcoin market. A pseudonymous cryptocurrency derivatives trader known as “CoinMamba” he wrote:
“I’d stay away from wanting any ALT here. If BTC breaks, it will go down hard. When they start moving, you will have plenty of time to make good voices. So be patient my friends. “
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