Journalist
Posted:
- Bitcoin whales were behind the latest bear trap, but the appetite is waning.
- SEC’s delayed decisions on BTC ETF approval are mitigating bullish excitement.
Bitcoin [BTC] crashed by more than 4% in the last 24 hours, giving up gains made after Grayscale’s legal victory. A closer look at the dynamics underlying the retracement offers some insights into why it pulled back.
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The king of cryptocurrencies switched hands at $26,202 at the time of writing, meaning it was trading back within the previously recorded low range. An inspection of the BTC stats revealed that the whales may be playing the market and are likely behind this recent pullback.
A classic whale play?
According to Bitcoin’s supply distribution statistic, BTC whales with more than 10,000 BTC (indicated in blue) started the accumulation on August 27. However, they continued the sale 24 hours later, but addresses in the 1,000 to 10,000 range (in purple) started accumulating on the same day. However, their accumulation was also short-lived.
Source: Sentiment
The whale activity observed in the last five days of August suggested that whales may have been involved in setting up a bull trap. Whale shakedowns are quite common, especially when the market gets excited enough to attract retail and leveraged traders.
It comes as no surprise that the market showed an increase in bullish confidence this week. We also witnessed an increase in open interest, as well as demand for leverage. This could have been an opportunity for the whales to set the trap.
Source: CryptoQuant
Both the estimated leverage ratio and the open interest rate were lowered on August 29. The same day BTC started giving up its short-lived gains. The cryptocurrency may have increased its negative side in the past 24 hours following an SEC-related announcement. The US regulator announced Thursday (Aug. 31) that it would be delaying its decisions on Bitcoin ETF applications from multiple companies.
🚨NEW: The @SECGov postponed a decision on the case @WisdomTreeFunds Place $BTC ETF.
— Eleanor Terrett (@EleanorTerrett) August 31, 2023
Many institutional, whale and retail enthusiasts have been waiting for a BTC ETF to start a major bull rally. A delay in the announcement may have eroded some confidence in the market, potentially creating some selling pressure.
Is the market close to the bottom of the cycle?
Bitcoin traders should note that whales have gradually increased their holdings after each major price drop. They are already showing signs of re-accumulation, although this does not necessarily guarantee that they will prevent a further sell-off.
Read more about the Bitcoin price prediction for 2024
Although there was a ‘shakedown’ of the leveraged positions, the number of liquidations was significantly low compared to the previous major liquidation just after mid-August. This could be a further signal that whales have less room for short-term profit-taking and may soon shift to a long-term perspective.