Despite recent market conditions that caused bitcoin's value to fall below the critical $39,000 mark, large-scale btc holders, often called “whales,” have demonstrated their confidence in the flagship cryptocurrency.
Cryptoanalyst Ali has shed light about this development via a post on X, indicating that these major investors have capitalized on the recent price correction to increase their bitcoin portfolios.
Ali's analysis revealed that around 67 new entities have joined the elite group of bitcoin holders holding more than 1,000 btc, representing a 4.50% increase in such holdings in just two weeks.
While some trembled in fear during the recent price correction, bitcoin?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>#bitcoin the whales accumulated more $btc!
Around 67 new entities already have 1,000 btc?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>#btc or more, which represents an increase of 4.50% in two weeks. pic.twitter.com/tje3fhznRR
—Ali (@ali_charts) January 30, 2024
This movement of the whales goes against the prevailing sentiment in the market. Despite the price volatility and uncertainties that have gripped the broader crypto space, this suggests a bullish outlook from these major players.
bitcoin Resilience and Recovery: Factors at Play
In stark contrast to its recent price decline, bitcoin has shown resilience and charted a course of recovery. The cryptocurrency has witnessed an increase of over 10% in value over the past week, with a notable 3.2% increase in the last 24 hours alone, bringing its trading price to approximately $43,412.
This upward trajectory is reflected in the cryptocurrency's trading volume, which has increased from less than $15 billion to more than $24 billion in a single day, indicating renewed investor interest and market confidence.
bitcoin's price resurgence can be attributed to multiple factors, with the fading impact of the Grayscale sell-off being a major contributor.
Bloomberg analyst James Seyffart recently highlighted a landmark event in which BlackRock's Spot bitcoin ETF, IBIT, almost equal Grayscale's GBTC with respect to trading volume. This was a significant moment as it marked the closest any bitcoin spot ETF has come to challenging GBTC, which has long held the “liquidity crown” in the crypto spot ETF space.
The positive implications of this development for the price of bitcoin are clear. Since IBIT's volume consists primarily of inflows, it can potentially offset the volume dominated by GBTC outflows.
Reduced selling pressure and market optimism
Notably, Grayscale's conversion of GBTC to a spot bitcoin ETF had been a key factor in bitcoin's fall below $39,000 last week, triggering a wave of liquidations by investors. from GBTC.
However, recent trends indicate a cooling among GBTC investors in their rush for profits. BitMEX Research, in a post about X, pointed GBTC had yesterday recorded its lowest daily outflow since the day of its launch, amounting to 192 million dollars.
bitcoin ETF Flow – Day 12
GBTC flow data output
Output of 192 million dollars
— BitMEX Research (@BitMEXResearch) January 29, 2024
This downward trend in outflows indicates a reduction in selling pressure in the bitcoin market, contributing to the recovery of the cryptocurrency's price.
Adding to the positive sentiment, Glassnode co-founders Jan Happel and Yann Allemann, known as Negentropic on X, have recently noted that bitcoin's recent rise above $42,200 has created substantial liquidity for long positions.
This situation suggests that bitcoin is filling the liquidity gap above the $42,000 mark, which could lead to volatility and swings in the market. Negentropic notes that approximately $659 million in settlements have already occurred.
If bitcoin maintains its upward trajectory, it could trigger new liquidations worth $1 billion in short positions, potentially leading to a “short squeeze.” This scenario, in which short sellers are forced to exit their positions due to a rapid price increase, could catalyze further growth in bitcoin's value.
Featured image from Unsplash, chart from TradingView
Disclaimer: The article is provided for educational purposes only. It does not represent NewsBTC's views on whether to buy, sell or hold investments, and investing naturally carries risks. It is recommended that you conduct your own research before making any investment decisions. Use the information provided on this website at your own risk.
