Declining number of Bitcoin whales means bear market is coming

Here’s what to expect based on past whale behavior and what it means for Bitcoin price action in the days, weeks, and months ahead.

The Case of the Vanishing Bitcoin Whale

The supply of Bitcoin is very scarce, and any time demand rises, the price will increase exponentially. This leads to price bubbles in cryptocurrencies, attracting more attention and participants.

Even retail investors can have a huge impact on price increases, and the impact of recent buying from businesses and institutions has been simply massive. Combined with the asset’s mining reward halving, which reduced the available supply, the bull run has exploded.

However, at the peak of each parabolic rise, long before retail participants and even some institutions began to take profits, large whale wallets holding 1,000 BTC or more began to decline rapidly.

According to Crypto Capital advisor Timothy Peterson, the drop in BTC wallets is the largest in history, if not more. But what does this mean?

METCALFE VALUE: Why Bitcoin Could Crash 60% to $25,000

Peterson said the drop was the largest in 40-day history, surpassing even the 2014 and 2018 bear markets in “both absolute and percentage terms.”

He continued via Twitter. “The decline in the number of large addresses means the price of Bitcoin could drop to $25,000 in the foreseeable future.”

He claimed that this target is “consistent” with the cryptocurrency’s Metcalfe value of roughly $15,000 to $33,000 per BTC.

A pullback to $25,000 could be similar to 2019-2020. Source: TradingView.com

A sharp correction to $25,000 would be about 60%, and just 10% away from the full correction from $13,800 in 2019 to $3,800 in early 2020. The sharp sell-off triggered a polar opposite reaction to the upside, and a rapid collapse would lead to a retest of demand, which could send the cryptocurrency soaring again.

The bull market has seen little correction so far, so there is a good chance that a larger sell-off is coming, as Peterson points out. Whales, who have cashed in profits from the top, can move the market, perhaps causing momentum to quietly shift, with uninformed exuberant investors buying at the top.

However, it’s worth pointing out that financial institutions might not let the price go that low, and if Bitcoin does fall that low, buying could come faster than expected.