The price of Bitcoin remains at USD 16,000, but the chain data suggests that BTC could face a major obstacle in the short term.
The Bitcoin price (BTC) is proving to be relatively stable at the $16,000 level, far outpacing both safe and risky assets, including gold and stocks. But in the short term, the digital asset faces a major obstacle in the form of whales.
Bitcoin’s price hike to $16,200 was accompanied by record cash volume
On November 12, the price of Bitcoin reached USD 16,199, a level not seen since the famous 2017 bull market. Although BTC fell to USD 15,600 in a matter of hours, it recovered quickly and at the time of writing it looks like the digital asset will try to break the intraday high.
The performance of Bitcoin, the S&P 500 and gold over the past week.
Bitcoin has shown resistance above USD 16,000, which historically has been a very important turning point. Because BTC overcame this crucial area, market sentiment around the leading cryptomone currency has become overwhelmingly optimistic.
Bitcoin Price Reaches USD 16,000 as ‚Extreme Greed‘ Takes Over
However, this could leave Bitcoin and the market in general vulnerable to a massive sale by the whales. Individual high net worth investors who own large amounts of BTC are known as whales and prefer to sell when there’s a lot of liquidity.
In most cases, the most liquid periods are when the price of BTC rises with significant market optimism.
The chain data suggest that a massive sale induced by BTC whales is possible
Whales have more BTC than usual and there has been an increase in whale deposits to the main exchanges.
These two data points show us that the probability of seeing a whale-led short sale is high.
Willy Woo: The price of Bitcoin will peak in December 2021 when the „main upside“ begins
When the Exchange Whale Ratio (how many whales have their funds in an exchange) exceeds 85%, it indicates that a correction is likely to occur. CryptoQuant CEO Ki Young Ju explained that 85% is the correction level and 90% is the indicator’s dump level.
Since the Exchange Whale Ratio is close to 85%, Ki said that „massive dumping“ is not likely to occur, but that we will probably see small corrections.
This data coincides with a report by Santiment that found that the number of large Bitcoin whales reached a yearly high.
Macro factors could lead Bitcoin to $1 trillion market capitalization, says strategic investor
Santiment analysts suggested that the number of Bitcoin addresses of whales that have more than 10,000 BTCs reaching 111 confirms the whales‘ confidence.
Number of Bitcoin whales by their holdings. Source: Santiment
While this is true, it also means that the Bitcoin market currently has an unusually high number of whales. Therefore, if whales start making their profits, it could cause a drop in the near future. Santiment analysts wrote:
„Are you looking to confirm that Bitcoin whales trust their assets? The number of addresses with at least $10,000 BTC just equalled a 2020 high of 111. Plus, those with 1,000-9,999 BTC are now only 6 below the all-time high of 2,135 wallets.
The future is not so bright for altcoins
Alternative crypt currencies (altcoins) are currently in a precarious position due to the current Bitcoin price cycle.
Do you regret not buying Litecoin and other major altcoins at mid-2017 prices? This is your second chance
If the price of Bitcoin goes up, it will continue to absorb the volume of the crypto market. As a result, altcoins would underperform compared to Bitcoin and possibly against the US dollar.
On the other hand, if the price of Bitcoin drops, it could shake the market, which would lead to a major correction in the altcoin market. A pseudonymous trader of cryptomoney derivatives known as „CoinMamba“ wrote:
„I would stay away from going long on any ALT for now. If BTC goes down, they will go down hard. When they start moving, you’ll have plenty of time to make good entries. So be patient, my friends.