David Puell, a senior analyst, presented several key data points on August 16 based on the latest 4-year cycle of Bitcoin pricing (BTC). The data shows that the $14,000 level is a crucial price point for Bitcoin due to the accumulation of whale clusters.
According to Puell, the whale accumulation shows that many large buyers acquired Bitcoin in the $9,000 to $12,000 range. The whales that bought at $9,000 are seeing relatively high profits, and those that bought the top are at break-even.
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Accumulations could result in volatile price action with buyers and sellers aggressively trying to get out of the $12,000 to $14,000 price range.
So, is a correction or a continuation of the Bitcoin spike more likely?
The data supports the arguments for both a reversal and a continuation. If the whales bought between $9,000 and $12,000, they have a good reason to make profits in the $12,000 to $14,000 range. They have had some benefits and/or are at break-even after months of stagnation.
On the other hand, if the whales are profitable and break even, they may want to see the recovery continue. Puell said he expects a build-up phase in the region of $10,000 after the price of Bitcoin rises to $12,000 or $14,000. He said that:
„Finally, the unspent accumulations of the whales confirm that a great battle is taking place. Two players are in play: the main buyers at USD 12,000-14,000 reaching their break-even price, and the current active buyers after the first peak in over a year. If we get a correction, it will most likely result in another large pool of re-accumulation in the $10,000 area (as expected from the previous volume profile); if we make the break, well… enjoy the ride.
How not to lose everything during the upturn
The current panorama of the Bitcoin Revolution market is unique compared to previous cycles. Puell said that due to macro factors – including the pandemic – Bitcoin presented unprecedented price movements.
For example, on March 13, Bitcoin’s price fell to USD 3.596 on BitMEX in a 50% drop overnight. The unusual price movements that Bitcoin experienced throughout 2020 as a result of unexpected external variables increase the possibility of an unusual price cycle. Puell explained that:
„Looking back only a year and a half, we had some of the most interesting market structures in any Bitcoin cycle. During several attempts at a ‚typical‘ uptrend with a strong halving narrative, two factors influenced the price, one after the other: PlusToken and COVID-19.