Analysts at Material Indicators, a crypto analytics company, claim that mega-whales went into huge sell offs as soon as Bitcoin hit $40,000 on Jan. 7. The results of this steep selloff was a quick 10% drop to the $36,000 area a few hours later.
However, the dip to the $30,000s area was quickly bought up, eventually pushing the price above $41,000 within 12 hours. The top ranked digital asset went ahead to set another all-time high of $42,000 but experienced yet another drop.
Material Indicators stated that it seemed like mega-whales started selling after the dump at around 2am UTC, and continued selling on the spikes. It seemed that these whales expected more downside hence they did not participate in the rally back up to $42,000.
Additionally, Material Indicators said that smaller whales who hold around $100,000 to $1 million started taking profit in the most recent pullback from $42,000 to $40,000. These smaller whales have however started buying again, to possibly break the $42,000 resistance.
High BTC Demand from The U.S. Market
Bitcoin has traded higher in certain exchanges such as Coinbase in the last week, showing the presence of large buyer demand from the U.S. This is an indication of a battle between normal whales profiting and new U.S buyers. The sharp rejection of every new all-time high is also an indication that whales may be aggressively taking profit as soon as BTC hits these new time highs.
It is therefore important that the demand for Bitcoin from the U.S is sustained in the near term, failure to which the high selling pressure levels from the whales can cause BTC to experience a correction in the near future.
What Is the Future of Bitcoin?
The price of Bitcoin is being driven by an extremely strong technical momentum that is causing traders to be reluctant to short it, although some have started ripping profits.
Meanwhile, one concern for Bitcoin is the potential recovery of USD. A trader under the pseudo name “Cantering Clark” pinpointed the rebound of USD and the decline of precious metals, saying that the question of the moment was whether $BTC would hold well, with the $DXY finding a floor and metals responding by being nuked.
So the question is, with the $DXY finding a floor surprisingly, and metals responding by getting nuked, does $BTC hold well? pic.twitter.com/OtTp519TCY
— Ryan 🐎 Cantering Clark (@CanteringClark) January 8, 2021
The risk of BTC correction could intensify if the USD begins to move forward since alternative stores of value like BTC and gold are priced against it. Currently the U.S. dollar index (DXY) is hovering at a support level on the monthly chart.
Image courtesy of pixabay
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