One Glassnode metric indicates that Bitcoins largest investors (BTC), have been increasing their reserves in line with the price recovery.
The “Whale Supply shock” is a on-chain indicator that shows the ratio of the Bitcoin owned by whales and fishes. Whales are addresses that have 10,000 to 100,000 BTC while fishes hold anywhere between 0.001 to 1,000 BTC.
A rising Whale Supply Shock reading means that whales are accumulating more Bitcoin than fishes. A declining Whale Supply Shock indicates that fishes are accumulating Bitcoin more quickly than whales.
BTC Whales Supply Shocks versus Price Source: Glassnode
However, the Whale Supply shock tends to provide “a measurement in supply locked in Whales wallets that can have [effect] on price dynamics,” said Dor Shahar, an analyst at CryptoJungle in a tweet on November 1.
BTC price correlation to whale activity
The Whale Supply Shock seemed to be predicting the macro Bitcoin price peak. The BTC price reached near $65,000 in April after the whale supply reached its sessional peak.
This metric revealed that whales started to distribute their coins among fishes in order to correctly predict a macro top and correction. The chart below shows how the Whale Supply Shock fell.
BTC Whales Supply Shock recovers with price Source: Glassnode
It began to recover after hitting a low point in July, which indicated that whales were reaccumulating Bitcoin faster than fishes. This coincided with Bitcoin recovering from $30,000 on July 20, to finally reach $67,000 three months later.
Shahar also noted that the correlation was evident around February 2020. He also said that whales started distributing their BTC “right prior to the ATH”, adding:
“Same thing happened in May 2019, when whales reached a point where their supply reached a peak. They began to distribute coins right before the macro top.
BTC Whales Supply Shock rises ahead of spot price peak in May 2019, according to the BTC Whales Supply Shock. Source: Glassnode
Shahar referenced the chart fractals, and said that the continued recovery in the Whales Supply Shock rate was not a sign of a multi-month accumulation trend. Shahar also pointed out that the October supply of Bitcoin by whales was much lower than Aprils $62,000.
“[It] could indicate an accumulation period or a general depleting supply of whales. “Conclusions. The ratio of the two groups, whales and fishes, gives an indication of supply dynamics. This can be used to visualize the effect of supply disruptions caused by whales and their impact on prices. A more sensitive macro top indicator is also available.
— Dor Shahar (@dorinvesting) November 1, 2021
Bitcoin technically bullish
Shahar expressed his bullish outlook on the Bitcoin market as the cryptocurrency recovered from below $60,000 and looked to a retest at its record high of $67,000.
Related: “Uptober” closes at a record high in the best month in 2021 — 5 things you should be watching in Bitcoin this week
The bullish continuation pattern of the Bull Flag that BTC price formed was seen to be forming. The price appears poised to move out of its current consolidation range and climb as high as the previous uptrends peak, also known by “Flagpole.”
BTC/USD daily chart with potential Bull Flag setup Source: TradingView
Bull Flags profit target is now above $70,000
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