When the weekly opening began, Bitcoin’s price dropped below $9,000 in a quick withdrawal, liquidating $30 million in long term debt on BitMEX alone. According to market data, part of the sale was the movement of whales closing positions, which led to panic selling among retail investors.
The whales, individual investors who own a huge amount of Bitcoin, have the ability to significantly impact the price of BTC and according to the chain data provider, CryptoQuant, the recent sale is indicative of the beginning of a downward trend within the market.
After the new weekly bearish candle, traders fear that BTC will fall to USD 7,000
Ki Young Ju, CEO of CryptoQuant, said:
„The BTC stock on Gemini reached its annual high a few days ago, and then began to decline. This could be a short-term opportunity for local purchase, but in the macro view, the reserve trend seems to be downward.
The last time BTC’s reserves fell sharply to a crucial price point was in February 2020 when Bitcoin reached $10,500. Over the next six weeks the price fell to 3,600 dollars.
Gemini’s BTC reserve
Why are they selling the „whales“?
There are three reasons why whales feel the need to profit from the current price level. One is that Bitcoin’s price has violently dropped to $10,500 twice in the last 11 months. The other is that the difficulty of mining is expected to see its biggest increase since January 2018 and the volume of spot trade is declining.
For whales that have large amounts of Bitcoin, liquidity is key. If there are not enough buyers in the market and a large whale starts selling, it can trigger a cascade of sales orders and settlements.
Stocks, Exchanges and COVID-19: 5 things to watch out for with Bitcoin this week
When spot market volume stagnates and futures market activity increases, in the case of whales, it raises concerns about a rapid short-term correction.
For example, on 13 March, the price of Bitcoin Millionaire fell 50% overnight to below $4,000 because whales began to sell at a high price. This led to a sharp sale that ended with USD 1 billion in futures contracts being settled in what is now the largest one-day decline in Bitcoin history.
The whales appear to be turning a profit after a massive 130% rally in the last three months. By doing so, they are able to safeguard their holdings and can also protect themselves against a relatively low volume on the cryptomoney market.
As with previous sales, major investors are also probably considering the current geopolitical risks and the volatility of the global stock market as external variables that may affect the momentum of the cryptomoney market.