- Bitcoin price faces a potential major “summer of 2021” style correction despite whale accumulation, according to on-chain data.
- The profit and loss (PL) index hovering around its 365-day moving average and the bull-bear market cycle indicator approaching a critical level signal potential further downside for Bitcoin.
- While whales have been aggressively accumulating Bitcoin at the fastest pace since April 2023, selling pressure from sources like the German government and Mt. Gox repayments threatens to outweigh this demand.
The price of Bitcoin is approaching a pivotal moment that could result in either a local bottom formation or a major correction similar to the summer of 2021. Recent onchain data provides insight into how whales are positioning themselves ahead of the next big move.
Onchain Metrics Flash Warning Signs
Two key onchain metrics monitored by CryptoQuant indicate growing risks in the market. The profit and loss (PL) index is hovering around its 365-day moving average, which has historically signaled major corrections when crossed to the downside.
Additionally, CryptoQuant’s bull-bear market indicator is approaching levels that previously marked the start of bear markets. Both metrics suggest Bitcoin’s price could have further to fall.
Whales Aggressively Buying the Dip
Despite the warning signs, Bitcoin whales have been aggressively accumulating during the recent downswing. Their BTC purchases over the past month were the fastest pace since April 2021. It indicates rising demand for Bitcoin at lower levels.
Institutional Support Remains Strong
Inflows into US-based spot Bitcoin ETFs have counterbalanced selling pressures. On July 5 when BTC hit recent lows, ETFs saw $1.43 billion in net inflows. Institutional interest has held up even amid declining prices.
Technical Resistance Looms Overhead
From a technical perspective, Bitcoin faces resistance around $59,000. That level aligns with its 200-day moving average and the breakdown point of its recent price trend. Reclaiming it as support is key for avoiding further downside.
Conclusion
While onchain data hints at growing risks, the actions of whales and institutional investors reveal continued demand below the market. As Bitcoin approaches its next major move, those underlying dynamics provide clues on what may be in store next for the cryptocurrency’s price.
