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According to on-chain numbers, Bitcoin will likely break out to a new all-time high soon as whales, miners, and long-term hodlers re-enter the market.
For the past two months, the price of Bitcoin (BTC) has been under extreme selling pressure from whales, according to on-chain reports.
However, five primary indicators indicate that big sellers are about to revert to hodlers or even accumulators of Bitcoin, while institutional demand remains high. This is an explosive setup that has the potential to bring Bitcoin to fresh all-time highs in the near future.
Whales stopped selling
The number of whales, or Bitcoin addresses with a balance equal to or greater than 1,000 Bitcoin, has decreased by more than 10% since Feb. 8, indicating a significant sell-off of Bitcoin.
Though Bitcoin reached two all-time highs during the two-month dumping cycle, the overall price growth has slowed considerably, with BTC encountering stiff resistance at around $60,000. Big Bitcoin investors, on the other hand, have stopped selling since March 31.
Portfolio rebalancing at the end of a quarter is a popular period for sell-offs. This was to be anticipated given Bitcoin’s 104 percent price increase since the beginning of the year.
Grayscale, the world’s largest crypto asset manager, revealed on April 6 that it had recently rebalanced its digital large-cap fund by selling Bitcoin.
If rebalancing is the primary catalyst, and given that the number of addresses carrying equal to or more than 1,000 BTC has returned to values last seen at the end of 2020 — when the price began to rise — whales may have finished selling for the time being.
Long-term hodlers selling Bitcoin are slowing down
When Bitcoin broke its previous 2019 peak in October 2020, it kicked off one of the most rapid and long-lasting spikes in coin days destroyed (CDD).
The CDD on-chain metric represents the “weight” at which long-term hodlers are willing to sell. It is determined by calculating the number of coins in a deal by the number of days since those coins were last spent. This means that the higher the CDD, the greater the amount sold.
However, since the beginning of the year, long-term hodlers’ sale has not only slowed significantly, but has also returned to the pace at which the sell-off was originally sparked in 2020.
This suggests that long-term hodlers have become increasingly confident in a higher Bitcoin price in the near term.
Miners have turned into Bitcoin accumulators again
Since Bitcoin miners’ income is derived from freshly mined BTC, they must sell their mined BTC on a daily basis to cover operating expenses such as energy costs. Some miners, on the other hand, prefer to speculate on the price.
They become nett accumulators by delaying the sale of Bitcoin. This is reflected in the miner nett location shift metric, which reflects the 30-day change in supply kept in miner addresses.
The last time miners were reluctant to sell their Bitcoin was about three months earlier, just before a significant price surge. This bullish shift indicates that miners anticipate higher prices in the immediate future.
Institutional demand remains high
Despite significant selling pressure from whales, institutional demand for Bitcoin has remained powerful. The nett transfer value of Bitcoin from/to exchanges is in the red, almost at a historical low, indicating that more Bitcoin is being withdrawn from exchanges than deposited.
This indicates that these coins are being moved to cold storage. This is common for institutions, since they make long-term commitments and choose safer custody options over leaving them on an auction.
There has been a historic liquidity crunch in trade Bitcoin accounts since the pandemic. Since November 2020, organisations have begun to collect in greater numbers, making it much more material.
This is evidenced by the significant drop in Bitcoin balances on exchanges over the last few months, especially on Coinbase, a popular option for institutions.
Meanwhile, Coinbase released its quarter one earnings and outlook yesterday, in which it states:
“Assets on Platform of $223 billion, representing 11.3% crypto asset market share, includes $122 billion of Assets on Platform from Institutions. … We expect meaningful growth in 2021 driven by transaction and custody revenue given the increased institutional interest in the crypto asset class.”
Not only is it certain that institutions have increased their sales significantly, but this evidence further demonstrates Coinbase’s belief that this buying pattern will not end too soon.
Weekly ascending triangle close to a break
A weekly ascending triangle has evolved since the beginning of February. According to statistics, this chart trend is more likely to break to the upside than to the downside.
The scale of the triangle shows a possible breakout target of $79,000 if the market breaks to the upside. Although neither the split to the upside nor the price goal is guaranteed, it is a chart worth monitoring alongside big on-chain signals.
Strong market powers — be long-term hodlers, miners, or whales — are both indicating trust in Bitcoin’s that price.
The ascending triangle adds to the evidence that this step may be inevitable and to the upside. While no one will mind a Bitcoin price of $79,000 in the foreseeable future, a collapse of the triangle is still a probability that should be considered, since not all main on-chain signals have completely synchronised just yet.