Even though the price fell, but whales did not sell, Bitcoin may rise to $16,000 in the future

Bitcoin (BTC) price is going through a volatile period. After reaching $14,100 for the first time since 2017, a sharp correction followed. However, key on-chain data and whale clusters show that high-net-worth individual investors are still holding positions.

This trend suggests that whales are not expecting a big pullback anytime soon. Low whale activity levels are a positive indicator following a big uptrend. This suggests that whales are not interested in selling Bitcoin just yet and anticipate a potentially bigger uptrend.

In the short term, Bitcoin has support levels of $12,900 and $13,300. Despite various macro factors, the stability of the dominant cryptocurrency above these two support levels is a bullish trend. The US election is ongoing, and although Bitcoin fell 4% before, its ability to rebound is relatively strong.

Investors seem confident

Two key on-chain indicators show that whales and retail investors are not actively selling Bitcoin in general. First, Bitcoin's leverage ratio shows that the volume in the derivatives market has not decreased. This shows that investors are not actively closing positions or trading amid the uncertainty of the US presidential election.

However, the high leverage of Bitcoin brings the risk of increased volatility after the election results come out. CryptoQuant CEO Ki Young Ju told Cointelegraph: Bitcoin leverage on derivatives exchanges has been increasing before election day. It may cause large fluctuations in Bitcoin prices due to waterfall liquidations.

"Waterfall liquidation" refers to the situation where futures contracts are liquidated continuously in a short period of time. For example, if more and more people are shorting Bitcoin, and the price of Bitcoin rises, it may cause shorts to be liquidated one after another. When this happens, it will trigger a waterfall of liquidations, causing a surge in volatility.

Secondly, the amount of Bitcoin sold on U.S. exchanges commonly used by whales, such as Coinbase Pro and Gemini, is relatively small. According to CryptoQuant data, less Bitcoin is flowing into U.S. exchanges, which means that there is a lower risk of short-term selling by whales in the foreseeable future. Ju explained:

“Whales on US spot exchanges are not currently active. The spot exchange inflow average is the average amount of Bitcoin deposited on spot exchanges (including US exchanges such as Coinbase Pro, Gemini, Bittrex, etc.). This helps to see the risk of whale selling in the short term.”

For example, on October 12, Bitcoin inflows to US exchanges suddenly spiked above the danger zone. As soon as they did so, Bitcoin fell sharply in a short period of time. For the past two weeks, exchange inflows have been well below the danger zone. This reduces the probability of a sudden pullback in the short term.

Whale clusters show Bitcoin is oversold

Whalemap also found that there are two technical levels that are important areas in the short term. According to whale clusters, $12,987 and $13,650 are very critical. Whale clusters form when newly purchased Bitcoin remains constant. Clusters show the price at which whales previously bought Bitcoin and are generally considered support levels.

Since Bitcoin price is hovering below $13,650 as of November 3, reclaiming $13,650 and holding above it will confirm it as support. Therefore, in the short term, a break above $13,650 is important for buyers to continue the rally. Bitcoin has established a positive technical trend over the past week by holding the $13,000 support level. As long as Bitcoin remains above the $13,000-13,500 range, the short-term bullish trend will not change.

In technical terms, Whalemap explained that Bitcoin's daily chart shows that the cryptocurrency is oversold. The relative strength index (RSI) is an indicator that measures Bitcoin's trend and whether it is overbought or oversold. Whalemap said that on the daily chart, the RSI shows that Bitcoin is currently oversold. The monthly chart reached a high since 2019, but closed below it. The blue area [$16,000] means an important blow. I expect whales to exit with profits there.

According to the daily chart, the $13,000-14,000 range is an area of ​​interest for sellers. Therefore, if Bitcoin holds above $13,000 and reclaims $14,000, the next resistance level is $16,000. A daily close above $14,000 in November is crucial for Bitcoin to strengthen in the short-term bull case. If this happens, just like in December 2017, Bitcoin could set a new all-time high in December.

Two major variables in Bitcoin's short-term price trend

Since mid-October, bitcoin miners have been selling more and more bitcoins. During the rainy season in northern China, which usually starts in the fall, miners increase production to take advantage of cheaper electricity. Since regions like Sichuan rely on hydropower, the rainy season leads to lower electricity costs. But after the rainy season ends, many miners suddenly stop mining bitcoins.

Data from ByteTree shows that miners sold a large amount of Bitcoin in the past week. In the past seven days, the net inventory change of miners was negative 1,060 BTC, which means that miners sold 1,060 more BTC than they mined, which brought huge selling pressure to the market. Therefore, as miners stopped mining BTC en masse, Bitcoin saw the second largest mining difficulty adjustment change in history. Glassnode wrote:

“We just observed the second-largest Bitcoin mining difficulty adjustment in history: -16%. It exceeds the -15.9% adjustment in March of this year. The only other time there was a larger downward adjustment (-18%) was nine years ago, in October 2011.”

Lower selling pressure from miners could strengthen Bitcoin's gains. On top of the potential for fewer miners to sell Bitcoin, the U.S. election will begin to have a greater impact. Analysts such as Alex Krüger say a Democratic sweep in Congress or the election of Joe Biden could boost sentiment around Bitcoin.

Krüger said that if Biden is elected, gold, Bitcoin and safe-haven assets are likely to increase in value amid significant uncertainty in the stock market, which will be preparing for additional regulation and potentially higher tax rates.

If President Trump is re-elected, it will lead to a rise in risky assets, which may also cause Bitcoin to surge in tandem. Barry Silbert, CEO of cryptocurrency investment company Grayscale, said that whether Trump or Biden wins, Bitcoin will benefit.