The whale clusters identify three decisive levels of support, which Bitcoin will need to protect in order to see a further increase in the short term
Whale clusters in Bitcoin (BTC) indicate three price levels critical to maintaining a bullish market structure in the short term.
These clusters are formed when large investors buy Bitcoins and do not move them, making them an unspent transaction. They typically identify the prices at which decisive support levels could be found, which BTC must protect in order to initiate a sustained rise.
According to Whalemap data, the three important support Crypto Bull review levels marked by whales are $10,407, $10,570 and $10,667.
Macro support levels in Bitcoin represented as whale clusters. Source: Whalemap
Bitcoin macro support levels represented as whale clusters. Source: Whalemap
Whale movements could signal the start of a bullish trend in Bitcoin
Whales, i.e. individual investors who own large amounts of Bitcoin, usually seek significant liquidity to buy or sell on exchanges. This is because they place substantial buy or sell orders, for which very liquid price levels need to be targeted.
Often whales accumulate during the capitulation of weak hands, and generally a sell-off of retail traders in general market panic coincides with whale purchases, as they have large sales volumes to absorb.
In recent days, a number of reasons and several unexpected events may have prompted retail investors to sell.
On 1 October, the US Commodities and Futures Trading Commission (CFTC) accused BitMEX of violating the Bank Secrecy Act. Immediately afterwards, BTC fell 4.1%.
Then, on 2 October, US President Donald Trump was positive at COVID-19, temporarily disrupting the financial markets and adding sales pressure on Bitcoin.
The two events intensified the fear in the cryptocurrency market 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 level corresponds to the whale clusters formed on October 2.
Two technical factors could contribute to BTC’s momentum
In addition to whale activity, there are two technical catalysts that could foster optimism about BTC.
First, the funding rates of futures on Bitcoin in major exchanges are negative or neutral. When funding rates are in these areas, it means that most traders on futures exchanges are betting against BTC.
A prolonged period of negative rates increases the likelihood of a short squeeze, potentially pushing BTC up. A pseudonym trader known as „Byzantine General“ commented:
„We are approaching Monday and the funding rates have become even more negative. Especially at Binance, where most traders are located“.
In addition, following the CFTC’s allegations against the exchange, the market resource Glassnode reports that investors have withdrawn BTC 45,000 from BitMEX.
Many industry experts had planned regulatory action against BtMEX, and the resulting outflow of Bitcoin is not particularly surprising.
Some might argue that the migration of funds from BitMEX to more reliable exchanges could benefit general market sentiment. Gemini, one of the platforms that has accommodated most BTCs fleeing BitMEX, is considered among the strongest exchanges in terms of regulatory compliance.