The data from the network suggests that Bitcoin price is likely to reach a new historic record soon, as the number of whales, miners accumulating, and long-term hodlers rise again.
April 8, 2021 | AtoZ Markets – The price of Bitcoin (BTC) has been under strong selling pressure by whales for the past two months, as data from the network revealed.
However, five key indicators are suggesting that top sellers are about to become hodlers or even Bitcoin accumulators again, while institutional demand remains high. This is an explosive configuration that could cause Bitcoin to reach new historical highs in the short term.
1. Whales have stopped selling
The number of whales (Bitcoin addresses with a balance equal to or greater than 1,000 Bitcoin) has decreased by more than 10% since February 8, as it suggests a large sale of Bitcoin.
Although the price of Bitcoin managed to reach two historic highs during the two-month dumping period for whales, the overall price increase slowed significantly, with the price encountering strong resistance around $60,000. Since March 31, however, large Bitcoin holders have stopped selling.
Typical for settlements before the end of the quarter is the rebalancing of the institutions’ portfolio. Since Bitcoin has seen a 104% price increase since the beginning of this year, this was expected.
Grayscale, the largest digital asset manager, announced yesterday that it has just undergone a rebalancing for its large-cap digital fund at the expense of selling Bitcoin.
If rebalancing is the main driver and considering that the number of addresses with a value equal to or greater than 1K BTC has returned to the levels last seen at the end of the year, after which the significant price increase began, the whales could end to sell for now.
2. Long-term hodlers selling Bitcoin are slowing down
With Bitcoin breaking the 2019 high last October, it not only started one of the fastest but also one of the most prolonged increases in Coin Days Destroyed (CDD).
This metric in the chain expresses the weight by which long-term hodlers are selling. It is calculated by taking the number of coins in a transaction and multiplying it by the number of days that have passed since the last time those coins were spent. This means that the greater the number of Coin Days Destroyed, the more volume they sell.
However, since the beginning of the year, sales of long-term hodlers have not only declined dramatically but have almost returned to the level from which settlement was initially triggered last year.
This suggests that long-term hodlers are increasingly confident that Bitcoin will rise in the short term.
3. Miners have turned into Bitcoin accumulators again
Since the Bitcoin miners’ revenue stream is the newly extracted Bitcoin, they regularly need to sell their extracted Bitcoin to pay for their operating expenses, such as electricity costs. However, some miners tend to be price speculators.
By preventing the sale of Bitcoins, they become liquid accumulators. This is expressed in the 30-day change in the supply maintained at the miners’ addresses.
The last time miners hesitated to sell their Bitcoin was just before a big price increase, almost three months ago. This positive change suggests that miners expect higher prices in the near future.
4. Institutional demand remains high
Despite the pressure to sell whales, the institutional demand for Bitcoin has not diminished. The net volume of Bitcoin transfer to/from exchanges is deeply marked, almost at a historic low, meaning that more Bitcoins are being withdrawn from exchanges than being deposited.
This is a sign that these coins are being transferred to long-term storage. This is typical of institutions, as they tend to make long-term investments and prefer safer custody solutions than leaving them in an exchange.
The biggest crisis in the supply of assets on exchanges in the history of Bitcoin has been a phenomenon since the pandemic. The phenomenon has become even more relevant as institutions have started to accumulate in greater numbers since November 2020.
This is made clear by the large continuous drop in the Bitcoin balance at the exchange, and particularly at Coinbase, which is the most used exchange by institutions in recent months.
Assets on the platform total $223 billion, representing 11.3% of the crypto market, including $122 billion in assets on the institutions platform. … We expect significant growth in 2021, driven by transaction and custody revenue, given the increased institutional interest in cryptocurrencies.
Not only does it become certain that institutions have added Bitcoins materially to their revenues, but it also shows their confidence that this buying trend is unlikely to stop anytime soon.
5. Weekly rising triangle near the break
Since the beginning of February, a weekly upward triangle has formed. Statistically, this chart pattern indicates an upward break.
If the price goes up, the size of the triangle suggests a potential breakout target of $79,000. Although neither the upward break nor the target price is a certainty, it is a chart worth keeping an eye on next to the main signs of the chain.
Strong market forces, whether long-term hodlers, miners, or whales, are all showing signs of confidence in Bitcoin’s rising price.
The upward triangle gives even more reason to believe that this move can be imminent and positive. A break in the triangle is also a possibility that must be taken into account since not all the main signs of the chain are fully aligned yet.
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