Bitcoin’s ‘digital gold’ narrative suffered a major blow last week. Here’s how the whales could change that. | Image: allstars/shutterstock.com
- Evidence shows that whales are buying the massive bitcoin dip.
- Bitcoin’s digital gold narrative was crushed in the recent selloff.
- If whales are indeed buying the dip, bitcoin can eventually regain its digital gold status.
Bitcoin has wiped out many traders over the last few days. The intense selloffs coupled with extreme volatility are shaking weak hands out. We know this because the average lifespan of coins that moved in March is around one month. This suggests that those who bought between January and February this year have capitulated.
Glassnode data scientist providing critical onchain data. | Source: Twitter
The question now is who’s buying this massive dip? Evidence suggests that whales once again gobbling BTC at rock bottom prices. Their buying activity can reignite bitcoin’s digital gold narrative.
Whales Are Very Likely Buying the Dip
Whales often wake up when bitcoin tanks. We saw this behavior in 2018 when these high-rollers bought over 450,000 BTC in nine months. It appears that they are once again accumulating bitcoin at a huge discount.
Heavy shift in ownership suggests accumulation. | Source: Twitter
Trader Max, aka “Bitcoin Jack,” noted that BTC registered huge onchain transactions over the last few days. The volume is higher than the $3,000 bottom in 2019. This strongly indicates that whales are buying the dip and carving a bitcoin bottom.
HODL Waves supports the idea that whales are accumulating. Their analysis reveals that 42% of bitcoin has not moved in two years. The huge percentage of stagnant bitcoin shows that ownership may have likely shifted from weak hands to strong hands.
Bitcoin’s Safe-Haven Narrative Was Crushed as the Stock Market Cratered
Bitcoin’s unique value proposition as digital gold was thrown out the window over the last few weeks. The top cryptocurrency plunged harder than the Dow Jones and the S&P 500 combined.
The historical dump was due to a mad scramble for liquidity. Investors sold assets like bitcoin to meet margin calls. All of this is of course due to the elephant in the room: COVID-19 that’s now classified as a pandemic.
Last Thursday, bitcoin crashed in tandem with the stock market. The correlated move may have effectively killed bitcoin’s safe-haven narrative. Unless, whales can send bitcoin’s price skyrocketing after they accumulate.
Entities Are Buying in Bulk at Current Prices
When whales accumulate, they tend to carve a floor or a bottom. The floor is the price level that will set the stage for the next bull rally. There are multiple signs suggesting that whales are starting to accumulate.
Massive volume plus bullish candles indicate accumulation. | Source: TradingView
The BTC daily chart shows the highest recorded volume in two years. In addition, we can see long wicks below the daily candles indicating the presence of buyers. Entities are buying in bulk at the current price range.
If whales or smart money investors are buying now, they will very likely have the ammunition to drive bitcoin’s price higher.
The bullish move can happen in the next few months around the halving as the stock market continues to struggle with the impact of the coronavirus. That’s how bitcoin can bring back the digital gold narrative back to life.
The above should not be considered trading advice from CCN.com. The writer owns bitcoin and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
Source: ccn.com
