Bitcoin’s price saw a sharp decline last Friday, dropping from $72,000 to $69,000, which caused a 10% average decrease across many cryptocurrencies. This sudden drop has raised concerns in the market, leading to questions about the driving factors behind these changes and how investors are reacting. To gain a better understanding of what may happen next, on-chain data is being analyzed for insights.
Whales, the large holders of Bitcoin, are not only holding onto their assets but are also increasing their supply during price dips. This strategic accumulation during lower prices suggests that these influential market players see the current situation as an opportunity to buy more. Their actions can have a significant impact on market sentiment and price stability, indicating that they may anticipate a potential rebound or at least do not expect further significant declines in the near future.
The data shows significant increases in Bitcoin balance across different cohorts of holders. Addresses with 100 to 1,000 BTC saw a rise of 30,601 BTC, those with 1,000 to 10,000 BTC increased by 34,834 BTC, and holders with over 10,000 BTC boosted their balances by 24,176 BTC. These notable increases suggest that larger holders are accumulating more Bitcoin during the recent market correction.
The average acquisition price for Bitcoin purchased between one day and three months ago is $67,500, representing 17% of the total circulating supply. If the price drops below this level, it could trigger a wave of selling as investors rush to minimize their losses. However, if the price falls below $67,500, it may find support in the $61,000 – $62,000 range, aligning with the realized price of significant wallet cohorts.
The realized price, a financial metric estimating the average cost at which all Bitcoins in circulation were last moved or transacted, provides insights into investor sentiment. If the market price falls below the realized price, it could indicate that, on average, 17% of the circulating supply is held at a loss, potentially leading to selling pressure. Conversely, if the market price remains above the realized price, 17% of the Bitcoin supply will be in profit, encouraging holders to retain their positions.
A potential price surge towards the $72,000 level could be significant this time, potentially leading to an all-time high breakout in the mid-term. This scenario is plausible if Bitcoin can maintain its position above the $67,500 support level. Overall, the resilience of Bitcoin is being driven by whale accumulation and key support levels, suggesting that the market may be poised for positive momentum in the near future.
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