Bitcoin price has re-established the $40,000 support level, but as the bull market advances to new historical highs, there may be a possibility of sharp selling.
According to analysts at the crypto-indicator analysis company Material Indicators, when Bitcoin reached $40,000 on January 7, large whales sold off sharply. This resulted in the Bitcoin price falling rapidly by 10% to $36,000 in the next few hours.
The decline was quickly bought out, eventually pushing the price above $41,000 within the next 12 hours. However, after hitting an all-time high of $42,000, BTC has seen a sharp decline. At the time of writing, the highest-ranked digital asset traded at $40,800. According to material index:
“So it seems that large cetaceans started selling after they started dumping around 2 am UTC, and continue to soar. My guess is that they expect more downside. They didn̵7;t really participate in the 42k rally. Will further support this.”
In the most recent retracement from US$42,000 to US$40,000, Fred explained that small whales holding between US$100,000 and US$1 million are beginning to make profits. He pointed out:
“But, now, they are buying again. About to break the 42k resistance. Only this time, it seems that ordinary whales ($100,000 to $1 million) are starting to make a profit.”
Considering that the price of Bitcoin was sometimes high on Coinbase last week, it is clear that buyers from the US are in great demand
This shows that there is a struggle between normal whale profits and new buyers in the US market. The sharp rejection of each new historical high also shows that once Bitcoin reaches a new record high, the whale may be actively profiting.
Therefore, maintaining US demand for Bitcoin in the short term is crucial. Otherwise, the huge sales pressure of whales may cause BTC to adjust in the foreseeable future.
Where does Bitcoin go from here?
Bitcoin currently has strong technical momentum and continues to push prices up. Therefore, traders are reluctant to short it, but some traders have already begun to profit.
In the short term, one of Bitcoin’s concerns is the potential recovery of the dollar. A pseudonymous trader named “Kant Clark” pointed out the rebound of the dollar and the decline of precious metals. He said:
“So the question is, as the USD DXY unexpectedly found a bottom line, and the metal reacted by being naked, does the USD BTC hold up well?”
The dollar index (DXY) is hovering at the support level on the monthly chart. Other valuable deposits such as Bitcoin and gold are priced relative to the U.S. dollar. Therefore, if the US dollar starts to rise, the risk of BTC correction may increase.