One of the challenges (and opportunities) of onchain analysis is that it can be used as a form of investigative journalism. You may have noticed folks who track specific whales and funds wallets on-chain, which seeks to identify the movement of large funds which could be adverse, or could indicate conviction.
The challenge is that dealing with individual wallet data is extremely time consuming, requires forensic investigation, and is often shrouded in uncertainties (is it really their wallet?). On the other side is macro analysis, which is where I spend my time, and this uses aggregate data and bigger picture trends to draw conclusions. Whilst simpler from a data ingestion standpoint, it requires greater control over which tool to use when.
In today’s video, we explore the highly likely probability that we have additional time and duration ahead of us as we hammer out this bottom. Part of this is driven by the inflow of some 80k BTC which looks to be sourced from a single whale entity. Why would they send 80k BTC into exchanges down here at $20k?
I see four logical reasons:
- Forced seller who is in trouble and needs liquidity ASAP.
- They want to de-risk as they expect serious pain below.
- They are actually a buyer but don;t want prices running away from them just yet.
- BTC being provided as collateral for margin.
The first three scenarios indicate resistance and point to probable continued sideways action. The fourth could be constructive, but again, potentially creates a forced seller if it goes wrong.
Thus, without having anything more granular, I would assign higher probabilities to sideways, boring, consolidation ahead of us. I sense we still need some duration, even if it is on a gradual uptrend over the next 3-6months.
Tricky times, but there is long-term value down here folks.
Watch the $21.8k Realized Price level. A strong bounce would be expected, but losing the level would not be a bullish development.