Bitcoin [BTC] Selling Pressure Exhausted, Whales Still Hoarding Despite Bearish Market Sentiment
Bitcoin [BTC] encountered significant resistance at the $69,000-70,000 mark, leading to a sharp decline. The broader market sentiment was affected by the recent Federal Open Market Committee (FOMC) meeting, which crushed hopes of a possible rate cut in September. This led to a bearish trend on the weekly chart of Bitcoin. In addition, the emergence of the Sam's Rule indicated potential economic weakness, further fueling recession fears and sending markets, including BTC, into a state of panic.
Cryptocurrency analyst Axel Adler said that active selling by long-term Bitcoin holders has significantly decreased, especially compared to early June. The decline in selling pressure from long-term holders suggests that the market may be stabilizing. The sharp decline in long-term supply also indicates that there has been intense profit-taking activity around the $68,000-70,000 level, but the current reduction in selling pressure may mean that sellers are exhausted.
Whale activity is an important indicator of market sentiment and confidence. The latest data from Santiment shows that the holdings of wallets holding 100,000 to 1 million BTC have increased as a percentage of total supply. The last time this accumulation pattern saw a similar spike was in May 2023, suggesting that large holders are confident in Bitcoin's long-term prospects despite the recent price drop. Conversely, the holdings of wallets holding 1,000 to 100,000 BTC have declined, indicating selling pressure from small whales
Another key metric to consider is the adjusted spending output profit ratio (aSOPR), which has been trending bearishly since March. An aSOPR value above 1 indicates that, on average, the sale of tokens is profitable. However, the overall decline in aSOPR indicates a bearish outlook as it indicates declining profitability and increased selling pressure.
To summarize, while the reduction in active selling by long-term holders and the accumulation of large whales are positive indicators for Bitcoin, the overall market sentiment remains bearish. The possibility of a recession and the lack of an immediate bullish catalyst suggest that Bitcoin may face challenges in the near term. Investors should closely monitor on-chain metrics and macroeconomic developments to navigate volatile markets.
