David Puell, an analyst at the chain, released several key data points on August 16 based on the past 4-year cycle of Bitcoin (BTC). Data shows that the $ 14,000 level is a crucial price point for Bitcoin due to whale strains.
According to Puell, whale clusters show many large buyers buying in the $ 9,000 to $ 12,000 range. Whales that bought for $ 9,000 saw relatively high profits, and those that bought the top are at a breakeven point.
The clusters could result in a volatile price action where buyers and sellers aggressively try to break out of the $ 12,000 to $ 14,000 price range.
Wale clusters top a weekly Bitcoin price chart. Source: David Puell
That is a correction more likely than continuation of the Bitcoin rally?
The data support arguments for both a pullback and a continuation. If whales buy for $ 9,000 and $ 12,000, they have a compelling reason to take profits in the $ 12,000 to $ 14,000 range. They have seen some gains and / or are in breakeven after months of stagnation.
On the flip side, if the whales are in profit and on breakeven, they might want to see the rally continue. Puell said he expects an accumulation phase to occur in the region of $ 10,000 following the move of BTC to $ 12,000 as $ 14,000. Hy sei:
‘Eventually, untouched whale strains confirm a major battle that is taking place. Two actors at play: top buyers at 12k-14k reach their breakeven price, and current buyers actively reach the first higher level in more than a year. If we get a correction, it will likely result in another large cluster re-accumulation in the 10k range (as expected from the volume profile earlier); if we break out, now … enjoy the ride. ”
The current landscape of the Bitcoin market is unique compared to previous cycles. Puell said that because of macro factors, including the pandemic, Bitcoin saw unusual price movements.
For example, on March 13, the price of Bitcoin dropped to as low as $ 3,596 on BitMEX in a 50% drop overnight. The unusual price movements saw Bitcoin increase throughout the year 2020 as a result of unexpected external variables increasing the chances of an unusual price cycle. Puell explained:
“Just a year and a half ago, we had some of the most interesting market structures in any Bitcoin cycle. During several attempts at a ‘typical’ bullish trend with a strong halving narrative, two swans hit price discovery one after the other: PlusToken and COVID-19. “
Some variables to consider
In the short to medium term, there are several variables that can have an impact on the price trend of Bitcoin.
In recent months, Bitcoin has seen some correlation with gold, possibly due to the uncertainty in global markets causing investors to consider alternative stores of value. The low interest rate policies by central banks around the world and the fastest growing money transfer are likely to have a positive effect on Bitcoin price as well, many analysts believe.
