Bitcoin price is slowly falling from highs set over a week ago, and the upward momentum is showing signs of easing. Most analysts have not expected the bull market to peak for some time. However, a significant reduction in BTC wallets with a balance of 1K or more coins could indicate that a bear market is coming sooner than expected.
Here’s what the past says about this type of whale behavior, and what it could mean for bitcoin price action in the days, weeks, and months to come.
The fall of the missing bitcoin whales
The supply of Bitcoin is so scarce that the price increases exponentially as demand increases. As a result, the price of the cryptocurrency bubbles and attracts more attention and participants in the decentralized network.
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Even retail investors can have a dramatic impact on price increases, and the impact of recent corporate and institutional purchases has been nothing short of dramatic. Combined with the asset’s hard-coded block reward, which halves the available supply, a bull market has broken out.
At the height of any parabolic advancement, long before retail participants and even some institutions take profits, large whale wallets with a BTC of 1K or more begin to decline rapidly.
BTC whale wallets with 1K coins or more are decreasing rapidly | Source: glassnode via Timothy Peterson
According to Timothy Peterson, cryptocapital advisor, there has been the greatest reduction in BTC wallets of this size or larger in history. But what exactly does that mean?
Metcalfe Value: Why Top Cryptocurrency Could Crash 60% to $ 25,000
According to Peterson, the decline is the largest historically over a 40-day period, beating the 2014 and 2018 bear markets “in both absolute and percentage terms.”
“The drop in major addresses implies that the price of # Bitcoin could drop to $ 25,000 anytime soon,” he continued on a Twitter thread.
This goal is in line with the Metcalfe value of the cryptocurrency, which is between $ 15,000 and $ 33,000 per BTC.
A correction back to $25,000 could look similar to 2019 to 2020 | Source: BTCUSD on TradingView.com
A correction of that size to $ 25,000 would be roughly 60%, only 10% less than the full 2019 correction from $ 13,800 to $ 3,800 in 2020. The steep sell-off caused an opposite polar response up and a quick relapse down for a bullish retest of demand could make the cryptocurrency rise higher again.
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Very few corrections have been made in the bull market so far, so a more significant sell-off is very likely, as Peterson points out. Whales, able to move the market and already taking their profits from the top, could lead to the tacit swing of still exuberant investors who unwittingly buy the top.
It should be noted, however, that the presence of institutions may not result in such a low drop in prices and that if they can get there they could be bought out faster than expected.
Featured image from Deposit Photos, Charts from TradingView.com