Bitcoin Drops 12.90% as Whales Sell Off Holdings, Market Consolidates
1min read Bitcoin has experienced a significant decline in its price over the past month, dropping by 12.90%. This price drop has coincided with a notable decrease in the amount of Bitcoin held by large investors, commonly referred to as whales. According to recent data, the aggregated amount of Bitcoin held by these whales has reached its lowest levels since 2019, marking a six-year low.
This decline in whale holdings suggests a significant shift in market dynamics. Whales, who typically hold large amounts of Bitcoin, are actively selling their holdings. This selling activity could be driven by various factors, including the need to cover operational costs as prices decline or a strategic move to close positions and wait for better buying opportunities.
The redistribution of Bitcoin from whales to retail investors could lead to a more decentralized market. This decentralization might reduce the influence of whale-induced market trends, potentially leading to a more stable and less volatile market. However, the high market demand for Bitcoin, as indicated by the exchange netflow, suggests that the broader base of investors is still interested in acquiring the asset.
Despite the selling pressure from whales, the market is experiencing more outflows than inflows, indicating that the overall demand for Bitcoin remains relatively high. This high demand is crucial for maintaining price stability, as it suggests that the market can absorb the selling pressure without significant price drops.
Looking ahead, the next levels for Bitcoin's price movement are uncertain. Although whale supply has declined, Bitcoin is not experiencing high selling pressure. The fund flow ratio to exchanges has also been declining, suggesting that current holders are not planning to sell and are instead exhibiting long-term holding behavior. This behavior indicates that investors are continuing to accumulate their Bitcoin holdings.
As a result, the market is likely to consolidate as buyers absorb the selling pressure without driving prices up. Consolidation is the most probable scenario, as buyers are not strong enough to absorb the selling pressure and push prices to higher resistance levels. If Bitcoin consolidates above $84,640, it is likely to form a local bottom before pushing to new all-time highs in the near future. However, if the price stays below $84,000 for several days, the next target on the CVDD channel is $64,700, which coincides with the April 2021 all-time high.
