The Bitcoin whale indicator detects a multi-month accumulation trend as BTC sees a retest of $ 67,000
Bitcoin’s largest investors (BTC) recently increased their reserves in line with the ongoing price recovery, a Glassnode metric shows.
The on-chain indicator known as “Whale Supply Shock” represents the ratio between the amount of Bitcoin held by “whales” and “fish”. Whales represent addresses between 10,000 BTC and 100,000 BTC, while fish are addresses between 0.001 BTC and 1,000 BTC.
The rising Whale Supply Shock Index indicates a higher cumulative stock of whales than fish. Conversely, a decline in the whale supply shock shows that fish accumulate bitcoin faster than whales.
However, whale supply shocks tend to “provide a measure of the supply that can be contained in a whale wallet”. [effect] in terms of supply dynamics and therefore pricing, “said Dor Shahar, a chain analyst at CryptoJungle, in a tweet on November 1st
Correlation of BT price with whale activity
The whale supply shock appears to have predicted a macroeconomic Bitcoin price high. For example, BTC price hit nearly $ 65,000 in April, two months after whale supply peaked.
The data shows that whales are beginning to distribute their money among fish species, accurately predicting the upcoming macro peak and correction. As a result, the shock of the whale supply diminishes, as shown in the graphic below.
It began to recover after hitting the bottom in mid-July, showing that the whales were amassing bitcoin faster than the fish. That coincided with Bitcoin’s rebound from around $ 30,000 on July 20, only to finally hit a new record high of $ 67,000 three months later.
Noting that the correlation was also visible around February 2020, Shahar stated that whales began distributing their BTC “just before ATH,” adding:
“The same phenomenon occurred in May 2019, whales congregating until their supply reached its peak by a certain point. Again they start distributing coins just before the macro peak. “
Shahar cited these chart segments and ruled out a sustained rebound in the whale supply shock ratio as a sign of “several months of cumulative uptrend”. He also noted that supply from the whales in October, when Bitcoin price was around $ 62,000, was much lower than it was in April, and said:
“[It] may indicate a period of accumulation or a generally dwindling supply of whales. “
Conclusion: relationship between the two groups; Whales and other fish provide a measure of the supply dynamics. It can therefore be helpful to imagine what supply shortages whales can cause and how they affect prices. That makes a more sensitive macro leading indicator.
– Dor Shahar (@dorinosystem) November 1, 2021
Bitcoin is technically bullish
Shahar’s bullish outlook for the Bitcoin market comes when the cryptocurrency rebounds below $ 60,000 after retesting record highs of $ 67,000.
Related: ‘Uptober’ closes at a record high in the best month of 2021 – 5 things to watch for Bitcoin this week
The BTC price seems to have formed a classic bullish continuation pattern known as the “bull flag”. However, the price appears poised to break out of its ongoing consolidation range and rebound to the high point of the previous uptrend, also known as the “flagpole”.
Bull Flag’s profit target is over $ 70,000.