Bitcoin is back in the spotlight after a 50 BTC transaction that may be owned by creator Satoshi Nakamoto. As speculation skyrocketed over Satoshi dumping his holdings, the flagship cryptocurrency plunged 11%, dropping below $ 9,000.
While Bitcoin seems to have stabilized in recent hours, one of the most prominent analysts in the cryptocurrency industry estimates it is ready for a steeper correction.
Bitcoin can be tied to further losses
The trading enthusiast, known for his bold price predictions, maintains that after the most recent rejection from the $ 10,000 resistance zone, the bellwether cryptocurrency is “back on track” to reach $ 6,300.
The massive retracement that Bitcoin underwent during Black Thursday in March is similar to the ‘capitulation of the previous bottom’ of January 2015, the chartist said. Therefore in combination with various technical indexes that estimate Bitcoin is in the overbought territory, he believes there is a $ 3,000 drop in progress.
But how realistic is this bearish scenario?
In a recent blog post, Santiment confirmed that, after analyzing the emotions through more than 1,000 social media channels, it seems that investors and market participants are still bullish. From the point of view of “contrast trading”, it could be argued that “there could be more downward market movements,” the behavioral analysis platform said.
This may be why the multimillion-dollar addresses in Bitcoin, popularly known as ‘whales’, are beginning to dump their holdings on the market.
Santiment’s “distribution of holders” table shows that since May 14, the number of addresses has decreased by 1000 to 10,000 BTC by almost 1%. This drop may seem insignificant at first glance, but when you consider that these whales contain between $ 9 million and $ 90 million worth of Bitcoin, a 1% drop translates to $ 1.2 billion.
Sitting on top of weak support
A look at IntoTheBlock’s ‘In / Out of the Money Around Price’ (IOMAP) model reveals that over 50% of Bitcoin addresses are ‘Out of the Money’ and 49.3% are ‘In the Money’. These numbers indicate that the investor base behind BTC could lose confidence in what the near future holds.
If the cryptocurrency pioneer manages to decisively fall below the USD 9,000 support level, investors who have been in the red can unload their assets, further pushing prices down.
Under such circumstances, the supply wall should be kept between $ 8,600 and $ 8,800, where 1.13 million addresses purchased over 730,000 BTC should be kept. Otherwise, Bitcoin could indeed drop to $ 6,300 as there is no significant barrier in between.
With such a pessimistic scenario in mind, it is important to remain cautious and wait for confirmation before entering into a transaction. Implementing a robust risk management strategy will help avoid adverse market conditions.
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