An army of small bitcoin (BTC) investors has been battling their larger counterparts for months to keep the price above $18,000..
The accumulation of bitcoin is important among fish
In particular, there has been some on-chain divergence between so-called whales (entities holding more than 1,000 BTC) and fish (entities holding relatively smaller amounts of BTC)as the bitcoin price keeps fluctuating within the $18,000 to $20,000 zone.
Bitcoin fish have been accumulating BTC during the coin’s sideways trend. For example, the net supply of bitcoin in addresses with a balance of 100-1,000 BTC has increased from 3.71 million in June to 3.77 million in Octoberaccording to data provided by Glassnode.
For its part, bitcoin supply held by addresses with a balance of 10-100 BTC has also increased from 3 million to 3.15 million in the same period. The trend is similar in entities that have between 0.001 and 10 BTC.
In the meantime, the same period of sideways bitcoin price action has coincided with a decline in the supply of BTC held by whales. For example, the supply of bitcoin held by the 1,000 to 10,000 BTC cohort has fallen from 3.82 million to 3.69 million since June.
Also, the 10,000-100,000 BTC cohort has decreased its Bitcoin holdings from 1.98 million to 1.92 million in the same period of time.
A basic interpretation of the on-chain data mentioned above is that fish are safer than whales on a potential bitcoin price bottom near $18,000.
But while these small investors may have been absorbing the massive selling pressure created by the larger investors, downside risk is historically higher with a declining whale populationas it’s shown in the following.
Interestingly, one of the few exceptions has been when bitcoin reached its all-time high price of $69,000, while the number of whales remained relatively unchanged. This may suggest that whales are having less influence on the market compared to previous yearsespecially as exchange balance continues to hit multi-year lows.
The correlation of the price of BTC with gold rises
The fish continue to accumulate amid reports that investors are once again viewing bitcoin as a safe-haven asset..
For example, Alkesh Shah and Andrew Moss, digital strategists at Bank of America, cited bitcoin’s weakening correlation with US stock indices and strengthening correspondence with gold price movements as a sign that the cryptocurrency is looking to live up to its “digital gold” narrative going forward.
In particular, bitcoin’s 40-day correlation with riskier markets such as the Nasdaq Composite and S&P 500 has flattened out near 0.69 and 0.75, respectively, which are below their record levels of a month ago. Secondly, its correlation with gold has gone from zero in August to 0.67 in October.
“A slowing positive correlation with SPX/QQQ and a rapidly increasing correlation with XAU indicate that investors may view bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains in sight“, they wrote.
Others, however, expect the bitcoin price to eventually break below the $18,000 support level.. Among them is independent market analyst Filbfilb, who argues that the price of BTC could fall to as low as $10,000, given the close correlation with risky assets and macroeconomic headwinds.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.