Bitcoin (BTC) price is proving to be relatively stable at around $ 16,000, well outperforming both safe and risky assets, including gold and stocks. In the short term, however, the digital asset is facing a major hurdle in the form of whales.
On November 12, the price of Bitcoin hit $ 16,199, a level not seen since the famous 2017 rally. Although BTC fell to $ 15,600 in a matter of hours, it rebounded quickly and at the time of writing it looks like the digital asset is trying to break the intraday high.
Bitcoin has shown resilience in excess of $ 16,000, which historically has been a critical turning point. As BTC crosses this crucial range, market sentiment around the top cryptocurrency has become overwhelmingly optimistic.
However, this could leave the cryptocurrency and the broader market vulnerable to a whale sell-off. Individual wealthy investors who hold large amounts of BTC known as whales prefer to sell when liquidity is high.
For the most part, these are periods of the highest liquidity when the price of BTC is rising with significant market optimism.
On-chain data suggests a whale-induced sell-off for BTC is likely
Whales hold more BTC than usual and the number of whale deposits on major exchanges has increased
These two data points show that there is a high likelihood of a short-term whale sell-off.
When the Exchange Whale Ratio indicator exceeds 85%, it indicates that a correction is likely. Ki Young Ju, CEO of CryptoQuant stated that 85% is the correction level and 90 is the dumping level for the indicator.
With the exchange whale ratio around 85%, Ki said that “mass dumping” is not likely, but minor corrections are likely.
This data is in line with Santiment’s report, which found that the number of large Bitcoin whales hit an annual high.
Santiment analysts suggested that the number of whale bitcoin addresses with over 10,000 BTC to 111 is a confirmation of whale trust.
While this is correct, it also means that the Bitcoin market currently has an unusually high number of whales. If whales start taking profits it could lead to a retreat in the foreseeable future. Santiment analysts wrote:
“Are you looking for confirmation that Bitcoin whales are convinced of their fortune? The number of addresses with at least $ 10,000 BTC has just hit a 2020 high of 111. Plus, addresses with $ 1,000 to $ 9,999 BTC are now just 6 below the ATH of 2,135 wallets. “
The future is less bright for altcoins
Alternative cryptocurrencies (Altcoins) are in a precarious position due to the current price cycle of Bitcoin.
As Bitcoin goes up, the volume will continue to be sucked out of the cryptocurrency market. As a result, altcoins would underperform against Bitcoin and possibly the US dollar.
Alternatively, if Bitcoin collapses, it could shake the market, which would result in a significant correction in the altcoin market. A pseudonymous cryptocurrency derivatives trader known as “CoinMamba” wrote:
“I would stay away from ALT here. When BTC collapses, they will fall hard. If they move, you will have plenty of time to make good entries. So be patient my friends. “