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Bitcoin price drops to $ 8,900, which is caused by the sale of whales on major exchanges

June 16, 2020

When the weekly opening began, the price of Bitcoin fell below $ 9,000 in a rapid retreat and settled long positions of $ 30 million only on BitMEX. According to market data, part of the sale was the movement of the whale’s closing positions, leading to retail panic among retail investors.

According to CryptoQuant, an on-chain data provider, whales, individual investors who own an immense amount of Bitcoin, have the opportunity to significantly influence the price of BTCThe recent sale indicates the beginning of a downward trend in the market.

Ki Young Ju, CEO of CryptoQuant, said::

“The Gemini BTC reserve peaked a few days ago a year ago and then started to decline. This could be a short-term local buy opportunity, but from a macroeconomic perspective, the reserve trend seems to be declining.”

Bitcoin price drops to $ 8,900, which is caused by the sale of whales on major exchangesBitcoin price drops to $ 8,900, which is caused by the sale of whales on major exchanges

Twins BTC Reserve

Twins BTC Reserve. Source: CryptoQuant

The last time BTC stocks fell sharply to a crucial price point was in February 2020 when Bitcoin hit $ 10,500. Over the next six weeks, the price dropped to $ 3,600.

Twins BTC Reserve

Twins BTC Reserve. Source: CryptoQuant

Why do the “whales” sell?

There are three reasons why whales have to use the current price level. For one, the Bitcoin price has violently declined $ 10,500 twice in the past 11 months. On the other hand, it is expected that mining difficulties will register the largest increase since January 2018 and the volume of spot trading will decrease.

For whales with large amounts of Bitcoin, liquidity is key. If there are not enough buyers in the market and a large whale starts selling, this can trigger a cascade of sell orders and residual items.

If the volume of the spot market stagnates and the activity of the futures market increases, there is concern for whales about a quick, short-term correction.

For example, the price of Bitcoin fell 50% below $ 4,000 overnight on March 13 because the whales started selling high.. This led to a strong sale that ended with $ 1 billion in futures settlement. This is currently the largest one-day retreat in Bitcoin history.

Whales appear to be making profits after a massive 130% recovery in the past three months. In this way, they can protect their possessions and also protect themselves against a relatively small volume in the cryptocurrency market.

As with previous sales, large investors are likely to see current geopolitical risks and global stock market volatility as external variables that can affect cryptocurrency market dynamics.

Bitcoin inflows on the stock markets are rising again as the US stock market collapses

Bitcoin inflows on the stock markets are rising again as the US stock market collapses. Source: CryptoQuant

What will happen to Bitcoin next?

From a technical point of view, Bitcoin has a simple short-term structure. A loss of $ 9,000 increases the likelihood of a decline in support from $ 6,000 to $ 7,500. In the past, $ 6,000, 6,400, 7,100, and 7,400 have served as strong levels of support.

Analysts are currently referring to BTC whales as Coinbase and Gemini as catalysts for the recent withdrawal.

In a tweet CryptoQuant Chief Strategy Officer Mason Jang said::

“The BTC inflows to the exchanges are increasing again. Since June 15, 02:00 UTC, 15,597 BTC have been flowing to the exchanges. Coinbase and twin whales were moving shortly before the crash.”

As the Dow Jones Industrial Average (DJIA) and major stock indexes in Europe and Asia continue to decline, a bitcoin correction in an uncertain time like this can lead to a violent reaction from investors.

In the short term, investors will see if Bitcoin can close above the $ 9,400 to $ 9,500 zone.