On August 16, chain analyst David Puell listed several key data points based on the past four-year cycle of Bitcoin (BTC). The data shows that the $14,000 level is a key price point for Bitcoin due to the presence of a whale population.
According to Puell, the whale population shows many large buyers buying in the range of $9,000 to $12,000. Whales buying at $9,000 are relatively profitable, while those buying at the highest price are at breakeven.
The whale population could lead to price volatility, with buyers and sellers aggressively trying to break out of the $12,000 to $14,000 price range.
The whales are above the weekly Bitcoin price chart. Source: david puell. david puell.
So, is Bitcoin’s rally more likely to correct or continue?
The data supports the argument for a pullback and continuation. If the whales are buying at $9,000 and $12,000, they have a compelling case to take profits in the $12,000 to $14,000 range. They’ve already seen some profits and/or are at break-even after months of stagnation.
Conversely, if the whales are in profit and at breakeven, they may want to see the rally continue.Puell said he expects an accumulation phase in the $10,000 area after BTC rises to $12,000 or $14,000. He said.
“Finally, the unspent whale swarm confirms that a great battle is being fought. Two actors are at play: the top 12k-14k buyers reaching their break-even prices, and current buyers active after their first higher high in over a year. If we get a correction, it will likely lead to a re-accumulation of another major cluster in the 10k area (as expected from the previous volume profile); if we break out, well…. Enjoy the ride.”
The current landscape of the bitcoin market is unique compared to previous cycles.Puell said that the price of bitcoin has experienced unprecedented volatility due to macro factors, including the pandemic.
For example, on March 13, the price of Bitcoin fell as low as $3,596 on the BitMEX, a 50% drop overnight. Throughout 2020, Bitcoin’s price has moved in an unusual manner due to unexpected external variables, increasing the odds of an unusual price cycle. explained Puell.
“Looking only a year and a half ago, we had some of the most interesting market structures of the Bitcoin cycle. During several attempts at a ‘typical’ bull trend with a strong halving narrative, two swans hit price discovery one after the other… PlusToken and COVID-19.”
Some variables to consider
In the short to medium term, there are several variables that could have an impact on Bitcoin’s price movement.
In recent months, bitcoin has seen some correlation with gold, which may be due to the uncertainty in global markets causing investors to consider other stores of value. Many analysts believe that the low interest rate policies of central banks around the world and the rapidly growing money supply may also have a positive impact on bitcoin prices.