The price of Bitcoin (BTC) has been under heavy selling pressure from whales for the past two months, as on-chain data reveals.
However, five key indicators suggest that top sellers are on the verge of becoming Bitcoin hodlers or even hoarders again, while institutional demand remains high. This is an explosive setup that can send Bitcoin to new all-time highs in the short term.
The whales stopped selling
The number of whales, which are considered Bitcoin addresses with a balance equal to and greater than 1000 Bitcoin, has decreased by more than 10% since February 8, suggesting a large Bitcoin sell-off.
While the price of Bitcoin managed to hit two all-time highs during the two-month dumping period, the overall price surge has slowed significantly and the price found stiff resistance at around $ 60,000.. However, since March 31, the large Bitcoin holders have stopped selling.
Typical of settlements before a quarter is the rebalancing of the portfolio by the institutions. As Bitcoin has seen a 104% price increase since the beginning of this year, this is to be expected.
Grayscale, the largest digital asset manager, announced yesterday that it has just undergone a rebalancing for its large-cap digital fund at the expense of the sale of Bitcoin.
If rebalancing is the main driver and taking into account that the number of addresses that have equal to or more than 1,000 BTC is back at the levels last seen at the end of the year from which the significant price increase began, the whales might have finished selling by now.
Long-term hodlers selling Bitcoin are slowing down
With Bitcoin breaking the 2019 high this past October, it started not only one of the fastest rallies but also one of the longest on Coin Days Destroyed (CDD).
This on-chain metric expresses the weight at which hodlers are selling in the long term. It is calculated by taking the number of coins in a transaction and multiplying it by the number of days that have passed since those coins were last spent. This means that the higher the Coin Days Destroyed, the more volume they will sell.
However, since the beginning of the year, long-term hodler sales are not only drastically slowing down, but are almost back to the level from which the sell-off was initially triggered last year.
This suggests that long-term hodlers have become increasingly confident of a higher short-term Bitcoin price.
Miners have become Bitcoin hoarders again
As the revenue stream of Bitcoin miners is freshly mined Bitcoin, they regularly have to sell their mined Bitcoin to pay for their operational expenses such as electricity costs. However, some miners tend to be price speculators.
By slowing down the sale of Bitcoin, they become net accumulators. This is expressed in the miner’s net position change, which shows the 30D change of the supply held in the miners’ addresses.
The last time miners were hesitant to sell their Bitcoin was just before a huge price spike, which was almost three months ago. This positive change suggests that miners expect higher prices in the near future.
Institutional demand remains high
Despite material selling pressure from whales, institutional demand for Bitcoin has not slowed down. The net volume of Bitcoin transfer to / from exchanges is very much in the red, almost at an all-time low, which means that more Bitcoins are currently being withdrawn from exchanges than deposited.
This is a sign that these coins are being moved to cold storage. This is typical for institutions, as they tend to make long-term investments and prefer more secure custodial solutions than leaving them on an exchange.
The largest exchange balance supply crisis in Bitcoin’s history has been a phenomenon since the pandemic. It has become even more material as institutions have begun to accumulate in greater amounts since November 2020.
This is clear from the continued large drop in Bitcoin’s balance on exchanges, and particularly Coinbase, which is mostly frequented by institutions in recent months.
Meanwhile, Coinbase released its first quarter earnings and outlook yesterday in which it states:
The assets on the platform of USD 223 billion, representing 11.3% of the market share of crypto assets, include USD 122 billion of assets on the platform of the institutions. … We expect significant growth in 2021 driven by transaction and custody revenue given increased institutional interest in the crypto asset class.
Not only is it certain that institutions have substantially increased their revenues, but it also shows your confidence that this buying trend probably won’t stop anytime soon.
Weekly ascending triangle near a breakout
Since the beginning of February, a weekly ascending triangle has formed. Statistically, This chart pattern offers a greater probability of breaking higher than lower.
If the price were to break higher, the size of the triangle suggests a possible breakout target towards $ 79,000. While neither the breakout to the upside nor the price target is a certainty, it is a chart worth keeping an eye on alongside the major on-chain signals.
Forces in the market, be they long-term hodlers, miners, or whales, are showing signs of confidence in a rising Bitcoin price.
The ascending triangle gives even more reason to believe that this move could be imminent and to the upside. While no one would be bothered by a $ 79,000 Bitcoin price in the near future, a triangle breakdown is also a possibility that needs to be considered, as not all of the key on-chain signals have fully lined up yet.
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