Bitcoin: Another reason why it’s due for a correction
Bitcoin‘s price might due for another correction after CryptoQuant’s Exchange Whale Ratio hit 0.87, a level last seen when BTC dipped to its yearly open at $28,956. While Bitcoin did see a surge yesterday as the price pumped to $34,800, the surge was met by holders waiting to sell their BTC. This sell-off is getting accelerated as many whales are migrating their holdings into exchange wallets to take profits.
Bitcoin Exchange Whale Ratio
This is a metric developed by CryptoQuant and is the ratio of the top-10 transactions to the inflows. In bear markets, this value is usually above 0.85 while in bull markets, it is typically below 0.85.
At press time, the value for the same had hit 0.87, a finding that indicated that exchanges are seeing BTC inflows from top-10 transactions, suggesting that the whales want to sell/take-profit here.
As explained in a previous article, Bitcoin’s price is unlikely to hit $50,000 anytime soon. However, a retest of $40,000 might be possible in exceptional cases. What seems likely, therefore, is a retest of the yearly open at $28,956.
In addition to the increase in exchange whale ratio, the short-to-mid-term outlook of Bitcoin seemed bearish due to the formation of a descending channel and triangle. Since both these patterns are inherently bearish, BTC will be expected to break bearish.
On the 4-hour chart, the theoretical Bitcoin price targets include $29,884 or the yearly open at $28,956. This is expected to break lower in case the price closes below the lower trendline of the channel. However, if the price manages to close above the trendline, BTC can be expected to surge towards the middle line at $33,300 or towards the upper trendline at $35,000.
Although the triangle pattern suggests almost the same, one thing that is common is that a breakout of the pattern will lead to a sell-off and retest of the yearly low.