Whale Supply Shock index rises as Bitcoin targets a retest of $ 67,000
Recently, Bitcoin’s largest investors increased their reserves along with the ongoing price recovery, a metric of Glass knot shows.
Known as the “whale supply shock”, the on-chain indicator represents the ratio between the amount of Bitcoin held by “whales” and “baby fish”. Whales represent addresses between 10,000 BTC and 100,000 BTC, while teenagers are addresses between 0.001 BTC and 1,000 BTC.
The increasing Whale Bow Shock Index indicates a higher cumulative proportion of whales than of juveniles. Conversely, the declining indicator shows that the fry accumulate Bitcoin faster than whales.
Whale Supply Shock Index BTC vs. Price | Source: Glassnode
However, supply shocks in whales tend to “provide a measure of supply trapped in whale wallets that can affect supply momentum and therefore prices,” said Dor Shahar, an on-chain analyst at CryptoJungle , in a tweet on November 1st
The BTC price correlates with whale activity
The whale supply shock has repeatedly predicted a macro high for Bitcoin price. For example, BTC price peaked at nearly $ 65,000 in April, two months after whale supply peaked.
The metric showing whales are starting to distribute their BTC to the fry accurately predicts the impending macro peak and correction. As a result, the Whale Bow Shock will decrease as shown in the table below.
Whale supply shock BTC recovers in line with price | Source: Glassnode
It began to bounce back from the low in mid-July, suggesting whales are raking BTC back faster than juveniles. That coincided with Bitcoin’s surge from around $ 30,000 on July 20 to a new ATH of $ 67,000 three months later.
The connection is also visible around February 2020, also Dor Shahar explain that whales started distributing their BTC “just before ATH”.
“The same phenomenon occurred in May 2019 with whales piling up to a point when the supply they were holding reached its peak. Again they start issuing coins shortly before the local climax. ”
Whale supply shock BTC hits ATH before the spot price high in May 2019 | Source: Glassnode
Shahar cited charting fractals and ruled out a sustained rebound in whale supply shock rates 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.
“This could indicate a period of accumulation or a general dwindling supply of whales.”
“The relationship between whales and juveniles provides a measure of the supply dynamics and helps to visualize the potential supply bottlenecks for whales and the effects on prices. In addition, this indicates a sensitive macro tip. ”
Bitcoin is technically bullish
Shahar’s bullish outlook for the Bitcoin market arises from a rebound from below $ 60,000 towards a retest from record highs of $ 67,000.
Once there, the BTC price appeared to have formed a classic bullish continuation pattern known as the “bull flag”. The price appears poised to break out of the ongoing consolidation range and climb to the peak of the previous uptrend, also known as the “flagpole”.
Daily BTC / USD price chart setting up a potential bull flag | Source: TradingView
The bull flag’s profit target is over $ 70,000.
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According to Cointelegraph