Amid apparent calm, concerning data looms: Are the largest Bitcoin holders behind the anticipated selling pressure?
Despite the relative calm seen in Bitcoin's (BTC) price this week, with movements not exceeding 2% even as altcoins saw notable rises, there are underlying movements that may indicate a short-term slowdown before BTC prepares for its next upward round. Recent data shows that 'whales' are moving significantly, raising the 'red flag' and indicating potential selling pressure.
Exchange flows led by 'whales' raise the 'red flag'.
Recent data revealed a concerning move: On July 17, large wallets containing between 1,000 and 10,000 BTC (whales) and those containing more than 10,000 BTC (mega whales) transferred nearly 50,200 BTC to exchanges. At current prices nearing $120,000, this represents potential liquidity for sale of over $6 billion!
Historically, large clusters of inflows deposited in exchanges have preceded price corrections. For instance, on July 7, a similar deposit of 2,500 BTC caused a price drop of $947. We also witnessed a larger inflow event between July 14 and 15, resulting in a 1.7% drop. This recent increase in whale activity is the largest in over a month, indicating renewed distribution pressure at a time when Bitcoin is struggling near its highs.
Short-term holders are making profits: Another warning signal?
It's not just the whales. The behavior data of 'retail' also sends warning signals. The profit ratio from spent outputs for short-term holders (SOPR), which measures whether new wallets are selling at a profit, rose to 1.05 on July 16, the highest level in over a month.
An SOPR value above 1 indicates that holders are making profits on average. Previous jumps in SOPR in late June triggered slight pullbacks, suggesting that a similar move may be in the works. In many cases, the crossing of the SOPR line above the price line led to price declines, and something similar occurred on July 16.
Bitcoin at a crossroads: Are we facing a 3% drop?
Bitcoin is currently trading in a narrow range between $117,293 and $123,203, with the latter being the previous high. Despite hitting an all-time high earlier this month, Bitcoin's price has only risen by 2% this week, while many altcoins have seen double-digit gains, indicating that the market is anticipating a decisive move.
Based on historical flows, on June 15, inflows of 33,663 Bitcoins to exchanges led to a 1.7% decrease. Given that the inflows on July 17 reached 50,214 Bitcoins (49% higher than June's level), Bitcoin could face a potential drop of 2.5% to 3% from the current price of $120,000. This decline could push the price into the $117,000 range, which aligns with the key support level of $117,293 that has held multiple times in July.
If this level is broken, the next key support for Bitcoin may be around $113,637, according to the Fibonacci extension indicator.
When will this pressure end?
It's important to note that this short-term bearish outlook could be alleviated if whale inflows decrease, and the SOPR for short-term holders continues to cool towards 1.00, indicating a reduction in profit-taking pressure. Additionally, reclaiming a price above $123,203 would restore short-term momentum in favor of the 'bulls'.
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