Whale clusters show three critical support levels Bitcoin must protect in order to see a larger rally in the near term.
Bitcoin (BTC) whale clusters point toward three critical price levels to maintain a bullish market structure in the near term.
Whale
clusters form when large investors purchase Bitcoin and do not move it,
making it an unspent transaction. These clusters typically indicate
where crucial support levels exist and the logic is that BTC needs to
maintain this level to see a prolonged rally.
According to data from Whalemap, the three important support levels marked by whales are $10,407, $10,570, and $10,667.
Macro Bitcoin support levels represented as whale clusters. Source: Whalemap
Whale movements may signal the start of a Bitcoin uptrend
Whales,
or individual investors holding large amounts of Bitcoin, usually seek
significant liquidity to buy or sell. This is because they deal with
substantial buy or sell orders and manage this need by targeting highly
liquid price points.
Whale accumulation often takes
place as weak hands capitulate and typically a retail sell-off amidst
peak fear in the markets coincides with whale purchases because there
are large sell volumes to absorb.
In the past five days, there were many reasons and unexpected events that could have pushed retail investors to sell.
On Oct. 1, the U.S. Commodities and Futures Trading Commission (CFTC) charged BitMEX with violating the Bank Secrecy Act. Almost immediately after, BTC plunged by 4.1%.
Then,
on Oct. 2, U.S. President Donald Trump tested positive for COVID-19.
The President’s unexpected COVID-19 contraction temporarily shook
financial markets and added some selling pressure on Bitcoin.
The two events caused fear in the cryptocurrency market to intensify and Bitcoin price fell from $10,900 to $10,500.
Over
the following days the price recovered to $10,670 and this new found
resilience corresponds with the whale clusters that formed on Oct. 2.
Two technical factors could further fuel BTC momentum
In addition to the activity of whales, there are two technical catalysts that could buoy the sentiment around BTC.
First,
the Bitcoin futures funding rate across major exchanges are either
negative or neutral. When a funding rate is low, it signifies that the
majority of traders on futures exchanges are betting against BTC.
A
prolonged period of negative rates raises the likelihood of a short
squeeze, which could cause BTC to increase. A pseudonymous trader known
as “Byzantine General” said:
“We're getting closer to Monday and funding has gone more negative. Especially Binance, where most of the fish are.”
Furthermore,
since the CFTC’s charge against the exchange, market data provider
Glassnode reports that investors pulled 45,000 BTC from BitMEX.
Many
industry experts foreshadowed regulatory action against BitMEX and the
resulting Bitcoin outflow is not terribly surprising.
One
could argue that the outflow of funds from BitMEX to more reliable two
exchanges could benefit the overall market sentiment. Particularly
because Gemini is considered to be one of the strongest exchanges in the
crypto sphere in terms of regulatory compliance.
source link : https://cointelegraph.com/news/bitcoin-whale-clusters-pinpoint-critical-levels-btc-must-hold-to-rally
