The Bitcoin bulls were taken off guard this week, as the year's largest single-day sell-off knocks BTC prices below $25,000.
Large Bitcoin investors, often referred to as "whales," have sent a resounding message of confidence. Recent data from crypto analytics firm IntoTheBlock reveals that these deep-pocketed players, those controlling at least 0.1% of the Bitcoin supply (equivalent to over $500 million), have significantly boosted their holdings by a staggering $1.5 billion during the final two weeks of August.
This remarkable increase in Bitcoin holdings is particularly noteworthy given the backdrop of market uncertainty. During this period, Bitcoin experienced a sharp drop, plunging to a two-month low, briefly recovering due to a pivotal court ruling in Grayscale's pursuit of listing a spot Bitcoin exchange-traded fund (ETF) in the United States.
The timing of the whales' acquisitions is of particular interest. Their accumulation of Bitcoin commenced shortly after August 17, when Bitcoin's price plummeted by over 10% to dip below $26,000, marking its lowest point since June. It suggests that these significant investors saw an opportunity amidst market turbulence and took action.
Furthermore, the whales continued to increase their holdings earlier this week following an important legal victory for asset manager Grayscale. A federal appeals court ruled in favour of Grayscale in its battle with the U.S. Securities and Exchange Commission (SEC).
This court decision ordered the agency to reconsider its refusal to convert the $14 billion Grayscale Bitcoin Trust into a spot Bitcoin ETF.
Market analysts perceive this court ruling as a significant step toward the introduction of the first spot Bitcoin ETF in the U.S., potentially making Bitcoin more accessible to a broader class of investors. However, despite these positive developments, Bitcoin's price has retraced all gains from the brief rally sparked by the Grayscale ruling, slipping back below the $26,000 mark as of Friday.
On the technical side, Glassnode's recent report provides insights into the Bitcoin price support levels that have been tested and, in some cases, breached. Bitcoin experienced a dramatic drop in price, descending below several long-term moving averages, including the 111-day, 200-day, and 200-week averages.
The week concluded with Bitcoin trading around $26.1k, signifying a substantial loss of market support.
Notably, this sell-off also pushed Bitcoin's price below the Short-Term Holder cost basis, a crucial on-chain price model historically associated with support during robust up-trends. With the Realized Price and Long-Term Holder cost basis trading well below $20.3k, this introduces an element of psychological vulnerability into the market.
One of the primary factors contributing to Bitcoin's recent market turbulence has been a significant leverage flush-out in the derivatives market. This event led to the clearing of over $2.5 billion worth of open interest in just a matter of hours.
Options markets have notably repriced volatility premiums from historical lows, although open interest has remained relatively stable. Meanwhile, spot markets continue to bear the weight, with more than 88.3% of Short-Term Holder supply currently held at an unrealized loss.
As per CoinStats, Bitcoin is currently trading at $25,791.11, down -0.78% in the previous 24 hours, with a live market size of $502 billion. It has a circulating supply volume of 21,000,000 BTC coins and a maximum supply volume of 21,000,000, with a 24-hour trading volume of $21 billion.
The bulls failed to defend the 20-day exponential moving average (EMA) of $26,947. This triggered a sell-off, taking Bitcoin below the $26,833 breakthrough mark.
The BTC/USDT pair has been bouncing within a huge range between $24,800 and $31,000 over the last few days, according to price activity. Traders typically purchase dips near the range's support and sell near the range's resistance. The bulls are anticipated to do the same at $24,800.
Bears must lower and maintain the price below $24,800 in order to grab control. If that happens, the pair's drop might reach $19,500. There is some little support near $24,000, but it may not last long.
In conclusion, the resilience and confidence exhibited by Bitcoin's whales, who increased their holdings amidst market fluctuations, demonstrate the ever-evolving dynamics of the cryptocurrency landscape. Their strategic moves reflect the belief in Bitcoin's long-term potential, even in the face of short-term volatility.
As Bitcoin navigates its price support levels and reacts to the large supply and flow of the market, the broader cryptocurrency community watches closely, prepared for the unexpected twists and turns that characterize this digital asset's journey.