Bitcoin (BTC) orbits $ 35,000 earlier in the week after a fresh dip panicked weak hands and fueled a whale festival – what’s next?
After hitting $ 30,000 in a “capitulation bottom” event, many thought the worst for Bitcoin was over. The weekend proved them wrong.
Cointelegraph takes a look at five things that could help set the course for price action in the days ahead.
From weak to strong hands
A process kept occurring during the May sell-off – new coins poured into old hands.
In other words, those coins that were trading near the all-time highs of $ 64,500 at higher prices have moved back to much lower prices. Their target, via exchanges or otherwise, appears to have been large volume investors (whales) or purses with little sales history.
Long term owners pile up by the sink. pic.twitter.com/0cpKPiaAy8
– William Clemente III (@WClementeIII) May 23, 2021
The phenomenon has been seen on previous falls, but the magnitude of the transfer has caught analysts’ attention this time around.
PlanB, developer of the Bitcoin stock flow pricing models, noticed this and argued that whales are now taking maximum advantage of the cold feet of new investors.
He uploaded a table showing the price at which each bitcoin moved. For April and May 2021, the trading habits are clear.
“In the graphic you can see the price level at which each of the total of 18.7 million BTC was last moved. So what happened in May? Weak hands sold ~ 1M BTC for $ 30,000 to $ 35,000 in May, which they bought in April for $ 55,000 to $ 60,000: a staggering loss of ~ $ 20 billion, ”he said explained.
“The good news: These 1M Bitcoin are now in strong hands.”
This panic sale did not even seem to match the whales’ clout. As Cointelegraph reported, large groups of buy-ins between $ 50,000 and $ 60,000 were effortlessly wiped out with the fall of the market, which continued down to $ 30,000.
“It is indeed unbelievable and embarrassing for Bitcoin veterans, but this volatility can be too great for noobs,” said PlanB added in separate Twitter comments.
“We all know the kind of people who sold in May. Look around, they’re always the same people.”
1 year of record fear
With that in mind, it is not surprising that the general sentiment in the crypto market – as measured by factors covering all participants – is extremely cautious.
On Monday, the Crypto Fear & Greed Index measures just 10/100, its lowest level in over a year and even lower than during the $ 30,000 test.
Fear & Greed, a crypto-based analog of the same indicator used for the overall economy, uses a basket of factors to determine general market sentiment at any given point in time.
Its implications can be used to decide whether a market is oversold or, conversely, is due for a correction at a certain level.
On May 12th, the index was still at 68/100, a fairly mid-range level that reflects the “greed” in the market but has plenty of room before a correction could take effect.
The adjustment revitalized sentiment and with it the index, which subsequently fell to its lowest level since the asset crash in March 2020.
“The more afraid the better the time to buy,” said Steve Courtney, CEO and founder of the educational resource Crypto Crew University. summarized last week.
Courtney speaks to a growing number of long-time customers who argue that it is better to simply buy BTC at lower levels than to give in to media reports that only focus on short-term events.
“I hold the most BTC I’ve ever had,” said popular trader Scott Melker uncovered this weekend.
A monthly record gyration for Bitcoin
At the time of writing, BTC / USD is hovering around $ 36,600 – 1.5% more than it was on Sunday but 20% lower than the same time a week ago.
Traders’ patience is put to the test. The initial $ 30,000 episode rebounded to $ 42,000, its all-time high in February, but didn’t last long.
Instead, Bitcoin returned to the $ 30,000 corridor after the mainstream media panicked over comments from China on mining and crypto-based trading. These levels persist as the main consumers are fed more and more alleged risk factors.
“While you are doing FUD, Bitcoin just continues to work as intended, producing block by block like clockwork according to a deterministic delivery schedule that is not controlled by anyone and has been unstoppable for more than a decade,” said Rafael Schultze-Kraft. Co-founder and CTO of the analysis service Glassnode, countered On Monday.
“Never lose sight of this in the midst of the noise.”
This “noise” remains particularly audible from the mainstream publication, under which the term “gyrations” has returned to describing volatility as that mot du jour.
Schultze-Kraft’s words now reflect the sentiments of well-known krypto names, and while there are few super-bullish short-term price predictions at the moment, there is no doubt about the overall performance either.
Still, as Capriole Investments founder Charles Edwards Remarks, BTC / USD is currently on track to record the biggest monthly red candle in its history.
The stock is retained
Few long-term indicators offer such a reassuring view of Bitcoin as stock-to-flow.
Throughout the volatility this month, and indeed all periods of volatile price movement, stock-to-flow has remained the go-to place for those looking for proof that Bitcoin is all as usual.
As its creator PlanB has underlined in the last few days, this time is no different. Even a correction of more than 50% from all-time highs hasn’t caused Bitcoin to violate stock-to-flow predictions.
“The actual Bitcoin price is at the lower limit of the S2F model. Am I concerned? No, ”he summed up on Sunday with data from the model.
PlanB stated that BTC / USD essentially has room to move around 50% either way around the all-time high and still meet expectations.
“It’s not okay if we stay at $ 32,000 for several months, but I expect the BTC price will go up again in the next few days / weeks,” he added.
That would even enable the monthly record downwick and keep the bull market. As Cointelegraph reported, the current four-year halving cycle requires an average Bitcoin price of at least $ 100,000, depending on the stock-to-flow model used. So far it has never been refuted.
Mining is facing a major upheaval
The old saying “price follows hash rate” may take a little more time to prove itself to hopeful bulls.
This week, Bitcoin’s network fundamentals are still making sense of recent events, and its impact on miners appears to be more widespread than originally thought.
According to data from various sources, including MiningPoolStats, Bitcoin’s hash rate is currently 136.7 exahashes per second (EH / s), around 30 EH / s below its all-time high.
Other estimates assume that the hash rate is more than 10 EH / s higher, but an exact number is ultimately impossible to achieve.
Bitcoin’s next automated difficulty adjustment, due in six days, will meanwhile open up mining to more potential hashing power and encourage miners to get on board.
This may be urgently needed as the last few days talk has turned to miners who are selling BTC en masse.
“I was able to confirm this effectively. The sale of miners is a big driver of price movements here. Make it what you want, ”said Nic Carter, co-founder of the data resource Coin Metrics, all in one Series of tweets.
Following the China narrative, Carter predicted that the mining operations would indeed be redistributed more evenly – but with a temporary price tag.
“Everything I see indicates an absolutely seismic shift in hash power from China to the world at large,” he continued.
“It’s not going to be elegant or pretty, but obviously great for distributing hashrat (and probably for carbon intensity).”