Bitcoin highly volatile: whales sell at every price spike
Analytics firm Material Indicators has identified that Bitcoin whales have started selling, increasing volatility
Now that Bitcoin has once again breached the $40,000 wall, experts are starting to fear the possibility of another big sell-off.
According to analysts at Material Indicators, a company specialising in the study of Bitcoin Bank crypto markets, whales sold large amounts of BTC when the price first reached $40,000: this caused a sudden 10% drop, causing the cryptocurrency to slide to $36,000.
Traders quickly bought the dip and managed to push the price above $41,000. Reaching a new all-time high at $42,000, BTC suffered another sell-off that took it to the current $40,100. Material Indicators explains:
„It appears that the mega-whales started selling after that dump at 2:00 UTC, and have continued to sell with each spike. My guess is that they expect further declines. They did not participate in the rally towards $42,000, and this further supports my theory.“
According to Material Indicators, the contraction from $42,000 to $40,000 was caused by profit-taking by the smaller whales, which hold BTC worth between $100,000 and $1 million:
„However, they have now started buying again. Presumably to break through resistance at $42,000. Only this time the normal whales ($100,000-$1,000,000) have started to confirm profits.“
As the price of Bitcoin seems to be slightly higher on Coinbase than on other exchanges at this time, buying demand seems to be coming mainly from the US.
Right now, there is an ongoing battle in the US market between the whales confirming their profits and the new buyers. The sharp contractions after reaching new all-time highs signal that the whales are selling aggressively as soon as the price of BTC increases.
It is therefore crucial that demand in the US remains high, otherwise the strong selling pressure from whales could cause a correction in the price of Bitcoin.
Dollar recovery poses a threat to BTC
Bitcoin’s technical parameters are currently very strong, which is why traders are reluctant to open short positions, although some have started to confirm profits.
In the short term, a possible negative factor for Bitcoin is the recovery of the US dollar. A trader known by the pseudonym „Cantering Clark“ has identified a rise in the dollar and a subsequent decline in precious metals:
„The question is, with USD surprisingly finding a bottom and precious metals in the red, how is BTC doing?“
The U.S. Dollar Index (DXY) hovers around the support level on the monthly chart. The price of alternative stores of value, such as Bitcoin and gold, is calculated in dollars: therefore, when USD moves up the risk of a BTC correction increases.