Bitcoin (BTC) has seen a drop of 30% from its peak of $126,200, currently trading slightly above the $85,000 support level, raising concerns about a potential decline toward the $70,000 range. Despite this, on-chain data indicates that institutions and high-net-worth individuals are accumulating BTC.
Key insights:
Bitcoin sharks have been accumulating at rates reminiscent of 2012, suggesting a trend toward buying the dip.
Significant selling from long-term holders and OG whales continues to limit upward movement, resulting in heightened near-term downside risks.
Mid-sized Bitcoin traders added 54,000 BTC in one week
Entities known as “sharks,” holding between 100 and 1,000 BTC, have collectively increased their holdings from approximately 3.521 million BTC to about 3.575 million BTC over the last week, absorbing 54,000 BTC from smaller holders, as reported by Glassnode.
This accumulation marks the fastest pace since 2012, indicating strong bullish sentiment from high-net-worth individuals and institutional players, even amidst BTC’s 30% decline.
Related: Bitcoin set to reach a new all-time high within the next 6 months: Grayscale
A similar surge in 2012 was followed by one of Bitcoin’s first significant rallies, where BTC surged from about $10 to over $100 in just a year, resulting in a 900% increase.
A similar scenario occurred in 2011 when aggressive accumulation by mid-sized holders followed Bitcoin’s impressive 350% rise to over $14 from less than $3.
If this historical pattern repeats, it may indicate further upward potential.
Bitcoin experiences selling pressure from long-term holders
Whales holding more than 10,000 BTC have been identified as the primary catalysts behind the recent sell-off over the past two months, revealing that the buying power from sharks was inadequate.
This mismatch aligns with Capriole Investments’ observation that unprecedented institutional buying has been countered by equally historic distribution from long-term holders.
Founder Charles Edwards noted in a post on Tuesday:
“While institutional buying on Coinbase has reached unprecedented levels (Z-score 15.7), it is being absorbed by ‘OG’ whales and long-term holders selling at rates not seen in years (Hodler Growth Rate at 0.6th percentile).”
Price gains could be limited until the heavy distribution from older coins decreases, he added.
Further exacerbating the downside outlook, veteran trader Peter Brandt pointed out Bitcoin’s recent dip below its parabolic support, a move that historically results in a price decline of about 80%. This could suggest a potential BTC price drop to as low as $25,000 if the scenario unfolds similarly.
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This article does not provide investment advice or recommendations. Every investment and trading action carries risks, and readers should perform their own research before making decisions. While we strive for accuracy and timeliness, Cointelegraph does not guarantee the precision, completeness, or reliability of the information in this article. This article may feature forward-looking statements that are subject to various risks and uncertainties. Cointelegraph is not responsible for any loss or damage arising from your reliance on this information.
