Bitcoin, the foremost cryptocurrency asset, has garnered significant interest from crypto enthusiasts as the coin is showcasing bullish momentum towards the $66,000 mark. Despite this newfound upward momentum, whale investors have resumed shorting BTC, raising concerns about a potential price drop.
Are Bitcoin Whales Anticipating a Decline?
According to Alphractal, a sophisticated investment data analysis platform, there is evidence of a bearish trend among Bitcoin’s whale investors in their latest study. The platform detected this negative shift by analyzing the Whale Position Sentiment metric for Bitcoin.
More specifically, the Bitcoin Whale Position Sentiment indicator has experienced a notable shift, implying that whales have begun to short again as the cryptocurrency climbed past the $64,800 price point. While the greater market is generally on the rise, this recent increase in whale shorting activity suggests a more cautious stance, which could exert short-term downward pressure on Bitcoin’s price.
The Bitcoin whale position sentiment metric is a “strong indicator” that tracks the direction of trades made by whales across various exchanges. An increase in this metric signifies more long positions, while a decrease indicates a rise in short positions.
Given the substantial correlation between this metric and price fluctuations, it is clear that whales exert significant influence and control over the market. Whale position sentiment, derived from the largest transactions executed throughout the day or hour across all exchanges, melds this data with broader positions to create a potent sentiment oscillator.
In light of these findings, the platform underscored that Bitcoin must maintain its position above the $62,200 threshold, recognized as the Short-Term Holder Realized Price; a drop below this level could shift the crypto asset into bearish territory.
Largest Liquidity Pool Stays Below $40,000
Alphractal also pointed out that recently, BTC traders have predominantly engaged in short positions as evidenced by the aggregated liquidation data across various exchanges. This prevalence of short positions has resulted in significant liquidation pools above the current price.
At present, a large volume of short positions have been liquidated due to the price exceeding $65,000. Moreover, the main liquidation pool in the short term now sits at $57,000.
Though this situation has resulted in considerable liquidations, there remain positions within the $67,000 to $71,000 range that have not faced liquidation over the last 90 days. However, upon evaluating from a one-year perspective, Alphractal observed that the most substantial liquidity pool is located beneath the $40,000 level.
In spite of the rise in shorting positions, BTC is exhibiting solid price performance, remaining above $65,000 with over a 3% increase in the past day. In broader timeframes, such as one week and one month, the digital asset continues to trend upward, showing increases of approximately 3.40% and 9.14% respectively.
Featured image from Unsplash, chart from Tradingview.com
