Despite the sad state of the investors at the moment, Bitcoin appears to be headed for a recovery. Since dropping from the $22,000 mark in September, the price has stayed around the $19K mark, unable to recover. Many people think that Bitcoin’s continued range-bound movement is an indication of, at minimum, a brief uptrend.
The unfavorable volatility in the price of bitcoin can be attributed to a number of elements that coincide with the current global financial crisis.
In order to pinpoint the market bottoms, investors can follow the movements of Bitcoin whales as they trade on derivatives exchanges.
According to an analyst at CryptoQuant, whales in the bitcoin (BTC) market are using a predictable pattern of trading to protect their assets during capitulation events, which are a large measure of market downturns.
The verified pseudonymous analyst ‘ETH whale hunter” wrote in a ‘Quicktake’ on the crypto market analytics platform that whales and funds frequently send BTC to derivatives exchanges to set or cover long positions during capitalization events.
Bitcoin Price Changes: A Snapshot
The bottom of the market can be shown by following these whales. Experts describe monitoring the average inflows and outflows of bitcoin exchanges as “a reliable long-term bottom indicator”. In this case, inflows over 2.5 BTC and outflows over 10 BTC are relevant limits to be monitored. These prices are local bottoms for bitcoin.
On the other hand, he advised investors to dollar cost average (DCA) into the market and suggested that traders employ on-chain indicators like Net Unrealized Profit/Loss (NUPL), Puell Multiple, Market Value to Realized Value (MVRV), and BTC Hashrate.
BTC Whale Activity To Intensify
The market for BTC has been experiencing more whale activity lately. In the light of increasing whale activity in the market, patterns of mitigating whale losses have been discovered. Whale investors are reported to have been responsible for the sharp drop in BTC’s exchange reserves, reaching just 8.7% of the total volume in circulation.
As an analogy, a recent study exposed a single whale who invested over $500 million into Bitcoin (BTC) purchases between September and December, ultimately accumulating over 5,000 BTC.
Many potential investors are on edge because they know inflation won’t subside any time soon and they don’t want to be caught “holding the bag.”
