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The price of Bitcoin (BTC) fell sharply by 10% in a single day on September 4th. After the decline, sentiment around the cryptocurrency market has become remarkably cautious with the Cryptocurrency Fear & Greed index showing “fear” for the first time. since July.
A massive buy order of Bitcoin at $ 8,800 on Bitfinex. Source: Cole Garner
However, the market data shows that the whales are preparing to buy Bitcoin at a support level of $ 8,800. It indicates that a similar decline is unlikely to occur on March 13, when BTC dropped to just $ 3,600.
Why did Bitcoin fall and why are whales bidding?
Analysts mainly attribute the Bitcoin correction to the sell-off of miners. Prior to the decline, analyst firm CryptoQuant pointed out that mining pools were moving to sell BTC.
After tracking outflows from major pools, the data showed miners moved unusually large amounts of Bitcoin into exchanges. Shortly thereafter, the price of Bitcoin began to drop, down to less than $ 10,000. Researchers She said:
“The miners have been moving unusually large amounts of #BTC since yesterday. #Poolin, #Slush, #HaoBTC removed bitcoins from mining wallets and sent some to the exchange. “
When Bitcoin’s trend initially changes, it tends to extend to the furthest support or resistance level. On March 13, for example, BTC flash dropped to a low of $ 3,600 before a significant rebound. From April to September, Bitcoin fetched from $ 3,600 to over $ 12,000.
Therefore, the whales may expect Bitcoin to drop to lower support levels, which include $ 8,800.
“Nice to see you again Bitfinex whale”, chain analyst Cole Garner commented today. “Smart Money has their offerings that stand at $ 8800. I expect the fund will likely be around there.”
The data could indicate that the whales anticipate a larger retreat coming in the near future. But it also shows that the whales are not expecting a massive correction from previous Bitcoin pullbacks.
Since March, the price of Bitcoin has risen 247%, so a correction probably came as no surprise to many traders. As reported today, Raoul Pal, CEO of Global Macro Investor, said that 25% -40% pullbacks in a bull market are typical of Bitcoin. He noticed:
“In post-Halving bullish cycles, bitcoin can often correct 25% (even 40% + in 2017), throwing out short-term traders (or giving swing traders a chance on the short side). Each of these was a buying opportunity. DCA opportunities ahead? “
What will happen to BTC next?
Data provider Whale Whalemap said many panicked so-called “HODLers” sold Bitcoin as it went down. BTC’s rapid pullback may have taken investors by surprise given the intensity of the decline. Whalemap She said:
“A lot of panic sales yesterday from HODLer that were quite successful in buying tops. Their strategy appears to be: buy high, sell low. “
Yesterday’s correction was a combination of whales taking profit and investors selling in panic, which could increase the chances of less volatility in the near term.
A map of the whales selling and buying BTC. Source: Whalemap
In the short term, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said Bitcoin could be close to a bottom formation. Waiting for a period of consolidation, Van de Poppe said this decline in markets may not be the end of the current “alternative season”. He She said:
“In my opinion, we are close to a bottom formation on $ BTC in these regions confluent with the CME gap. Trade rebounds actively as an HL must build for support to be confirmed. The crazy altseason continues in the coming months. “
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