Bitcoin price has rebounded to the USD 40,000 level as a support, but as the bull drifts towards a new record, the possibility of another sharp sell-off threatens.
According to analysts at Material Indicators, a crypto analytics company, mega whales were selling strongly when Bitcoin hit $ 40,000 on January 7. This led to a rapid 10% drop to the $ 36,000 area in the next few hours.
The dip was quickly bought up, eventually pushing the price above $ 41,000 in the next 12 hours. However, BTC saw another big drop after hitting another record high at $ 42,000, and at the time of writing, the top-ranked digital asset is trading at $ 40,800. According to material indicators:
“So it looks like mega whales started selling after that landfill around 2pm UTC and kept selling on the spikes. I suspect they expected more downside. They didn’t actually participate in the rally until 42km, which would further support that point. “
In the most recent drop from $ 42,000 to $ 40,000, Fred explained that smaller whales, holding $ 100,000 to $ 1 million, started to make a profit. He noted:
“Now they have started buying again. Presumably to break the 42k resistance. Only this time it appears to be the normal whales ($ 100,000 – $ 1 million class) that started making a profit. “
Considering that Bitcoin price has sometimes traded higher on Coinbase over the past week, it is clear that there is a high demand from buyers from the US.
This suggests there is a battle going on between normal whales making a profit and new buyers in the US market. The sharp rejections of each new all-time high also indicate that whales can aggressively turn profits once Bitcoin hits a new all-time high.
That is why it is important that the demand for Bitcoin from the US continues in the short term. Otherwise, the high selling pressure of whales could cause BTC to see a correction in the foreseeable future.
Where could Bitcoin go?
Bitcoin currently has extremely strong technical momentum that continues to drive the price up. For this reason, traders are reluctant to go short, but some have started taking profits.
In the near term, one concern for Bitcoin is the possible recovery of the US dollar. A pseudonymous trader known as “Cantering Clark” pointed out the recovery of the US dollar and the decline in precious metals. He said:
“So the question is, with $ DXY surprisingly deepening and metals reacting by being nailed, is $ BTC holding up?”
The US dollar index (DXY) is floating at a support level on the monthly chart. Alternative value stores, such as Bitcoin and gold, are priced against the dollar. So if the dollar starts to rise, the risk of a BTC correction could increase.