The whale groups show three critical levels of support that Bitcoin must defend to achieve greater recovery in the short term.
The Bitcoin Whale Groups (BTC) are pointing to three critical price levels to maintain a bullish market structure in the short term.
These groups are formed when large investors buy Bitcoin and do not move it, making it an unspent transaction. They usually indicate where crucial support levels exist, and the logic is that BTC needs to maintain this level to see a prolonged rally.
According to Whalemap data, the three major support levels marked by the whales are $10,407, $10,570 and $10,667.
Whale movements could signal the start of a bullish Bitcoin trend
Whales, or individual investors who own large amounts of Bitcoin, often seek significant liquidity to buy or sell. This is because they deal with substantial buy or sell orders and manage this need by targeting very liquid price points.
Whale accumulation often occurs when weak hands capitulate and a retail liquidation amidst a peak of market fears usually coincides with whale purchases because there are large volumes of sales to absorb.
In the last five days, there were many reasons and unexpected events that could have pushed retail investors to sell.
On October 1st, the US Futures and Commodities Trading Commission (CFTC) accused BitMEX of violating the Bank Secrecy Act. Almost immediately thereafter, BTC collapsed by 4.1%.
Then on October 2, US President Donald Trump tested positive for COVID-19. The president’s unexpected contraction of COVID-19 temporarily shook the financial markets and added some selling pressure on Bitcoin.
The two events caused fears in the crypto market to intensify and the price of Bitcoin fell from $10,900 to $10,500.
Over the next few days, the price recovered to $10,670 and this new resistance was matched by the whale groups that formed on October 2.
Two technical factors could further boost the BTC rise
In addition to whale activity, there are two technical catalysts that could boost sentiment around BTC.
First, Bitcoin’s futures funding rate on the major exchanges is negative or neutral. When a funding rate is low, it means that most traders on futures exchanges are betting against BTC.
A prolonged period of negative rates increases the likelihood of a small contraction, which could cause BTC to rise. A trader known as “Byzantine General” said:
“We are approaching Monday and the funding has become more negative. Especially Binance where most of the fish are.
In addition, since the CFTC charge against Bitcoin, market data provider Glassnode reports that investors took out 45,000 BTCs from BitMEX. The holdings were mainly moved to Gemini and Binance, two of the major cryptomoney exchanges.
Many industry experts predicted regulatory action against BitMEX, and the resulting Bitcoin exit is not very surprising.
It could be argued that the exit of BitMEX funds to two more reliable exchanges could benefit overall market sentiment. Particularly since Gemini is considered to be one of the strongest exchanges in the field of crypto-currency in terms of regulatory compliance.