Where exactly is the bottom for Bitcoin?
Bitcoin, as many know, has been in a year-long downtrend, dropping from a high of $65k to as low as $20k and showing few signs of reaching its bottom.
So far, this bitcoin price decline has gone beyond -70%. Its dominance currently stands at 38.34%, an increase of 0.21% over the day.
The question, “where exactly is the bottom?” seems to have a fairly decent answer now, as fresh data shows “classic” bottom behavior.
Historically, when bitcoin enters a downtrend and nears its bottom, something interesting almost always happens: Large volume investors (institutional investors) are usually observed to move their coins into derivatives exchanges en-masse.
This month, the same is happening, signaling a likely bottom.
As of June this year, bitcoin has hit its lowest levels. A range of sorts, between $18k and $25k.
According to cryptoquant analysts, on 7 September, there was a significant uptick in the monthly average number of transactions made between spot exchanges and derivatives platforms, meaning that something is going on.
Maartunn argues that the whales are behind this and are hedging their losses by transferring funds to use in futures trades.
“A typical thing for local bottoms is a spike in exchanges to derivatives flow mean (30d-MA). And guess what, that’s happening right now,” he said in a tweet.
Maartunn’s argument makes sense if one considers the market’s history. Only that this “spike in exchanges to derivatives flow mean” scenario has been happening long before bitcoin’s latest dip from $22k to lower than $19k.
On the other hand, Ether has had its derivatives in a similar scenario long before the announcement of the upcoming merge less than a week from now.
As a result of this, the market on Ethereum is already ahead of bitcoin by almost three months in terms of liquidity inflow.
“The assumption in this thesis is that whales will deposit bitcoin and derivatives in exchanges to open futures long-positions and be able to protect their positions from forming a local bottom,” Maartunn concluded.
Major Selling Ongoing
Meanwhile, the issue of the 500 BTC tranche that was sold a few weeks ago, after nine years of hibernation, is still in question.
Whoever sold those coins would have made about 2800% of their initial investment and about $95 million in profit.
Whalemap, a whale-activity monitoring body, additionally emphasized the on-chain support levels in place based on the large volume accumulation around them in the past. These levels are $19,000, $16000, and $13,000.
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