bitcoin has witnessed a drop below the $51,000 level over the past day; This is what is potentially behind this drop according to on-chain data.
bitcoin has fallen below the $51,000 level over the last day
Yesterday, bitcoin had seen a sharp rise to touch the $53,000 level and set a new high for the year, but the rally was short-lived as the cryptocurrency soon followed with a sharp decline to below the $51,000 mark.
However, shortly after this drop, the coin quickly recovered above $52,000, giving investors hope that the drop was perhaps only temporary. However, since then, the asset has fallen back towards the same lows, as the chart below shows.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/Bitcoin-falls-below-51000-what-is-behind-this-drop" alt="bitcoin price chart” width=”1534″ height=”854″/>
btc has gone down a net amount in the past day | Source: BTCUSD on TradingView
Due to these red returns, ethereum has managed to outperform bitcoin on both the daily and weekly time frame (eth even has 5% gains in the latest period). However, altcoins have still performed noticeably worse than the original cryptocurrency.
Now, what is driving this decline in the asset? There are likely many factors involved, but one of the main reasons could lie in this chain development.
btc whales have recently participated in a huge sell-off
As analyst Ali pointed out in a mail On X, btc whales have been selling off big recently. “Whales” are defined as network entities that own between 1,000 and 10,000 btc.
Because their holdings are so large, whales can be influential beings in the market and, as such, their movements are worth following. The chart below shows the trend in the combined holdings of these huge bitcoin investors over the past few months:
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/Bitcoin-falls-below-51000-what-is-behind-this-drop.jpeg" alt="bitcoin Whales” width=”2868″ height=”1304″/>
The value of the metric seems to have gone down in recent days | Source: @ali_charts on X
From the chart you can see that bitcoin whale holdings had been increasing since the beginning of the year, until a couple of days ago, when the value of the metric changed.
This would suggest that these huge investors had been accumulating throughout the rally that ultimately ended up taking the coin above $52,000, but now it appears that these investors have finally decided to take some profits.
In this liquidation, bitcoin whales have dumped a total of 30,000 btc of their holdings, worth over $1.53 billion at the cryptocurrency's current exchange rate.
This is a significant amount, so it is possible that this selling pressure could be at least partially behind the latest drop that btc has seen. However, it is worth noting that not all of the recently accumulated whales have been sold yet, as stocks are still notably above January levels.
It now remains to be seen whether the other whales will follow the lead of these sellers and claim their profits, or whether they will continue to hold strong, believing that bitcoin will eventually recover.
Featured image from Shutterstock.com, Santiment.net, chart from TradingView.com
