Data suggest Bitcoin price drops at each new ATH are the result of investors sell off to take profit when BTC peaks
Bitcoin price is currently trading below $ 40,000, at $ 39,865. It seems that BTC has been facing a major correction, as many investors sell off to take profits when cryptocurrency prices peak.
BTC/USD 4-hour chart | Source: TradingView
Bitcoin price has re-established $ 40,000 as support but another strong sell-off is likely
According to analysts at analysis firm Material Indicators, the giant whales sold off sharply when Bitcoin hit $ 40,000 on Jan. 7. This resulted in a 10% rapid drop to the area below $ 40,000 in the next few hours. And this has been confirmed today.
BTC saw another major drop after establishing another all-time high at $ 42,000 not too long ago.
Material Indicators stated:
“So, it looks like mega-whales started selling after that dump at around 2am UTC, and continued selling on the spikes. My guess is they expected more downside. They did not really participate in the rally back up to 42k, which would further support that point.”
In the most recent pullback from $ 42,000 to $ 40,000, the Material Indicators side explains that the smaller whales, who hold between $ 100,000 and $ 1 million, have started to make a profit.
The report from Material Indicators emphasizes:
“However, now, they have started buying again. Presumably to break the 42k resistance. Only this time, it seems to be the normal whales ($100k – $1M class) who started taking a profit.”
Considering that at times last week, Bitcoin’s price was trading higher on Coinbase, there is clearly a strong demand for buyers from the US. This shows that there is a war between the normal whales taking profits and the new buyers in the US market. Strong rejections from each new all-time high also signal that whales could be actively taking profits as soon as Bitcoin hits new all-time highs.
Therefore, the demand for Bitcoin from the US must be maintained in the near term. Otherwise, the high selling pressure from the whales could cause BTC to see a correction soon.
Bitcoin currently has an extremely strong technical momentum that continues to push prices higher. For this reason, traders are reluctant to short, but some have begun to take profits. The US Dollar Index (DXY) is hovering at support on the monthly chart. Alternative value stores, like Bitcoin and gold, are priced against the dollar. Hence, if the dollar starts to rise, the risk of BTC corrections could increase.
You can see the BTC price here.
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