Bitcoin experienced a strong uptick over the weekend nearly topping $11,200 off the back of a strong week of fundamental developments for the world’s largest digital currency. However, at the time of writing, bitcoin is starting the week down approximately 5%.
A sudden risk-off Monday has enveloped all markets resulting in a strong sell-off across all assets except the dollar index ($DXY). The dollar has continued to flirt with a near-term uptrend over the past month, but has been “drug down” repeatedly by Federal Reserve statements aimed at weakening it.
Despite the increased bullish sentiment over the weekend, early signs of bull exhaustion were being seen on Friday. Per the Weekly Jab Newsletter, “The risk indicator (RI) sits at 0.56 and has begun to form a downtrend despite price’s current reprieve, i.e. a divergence between price and RI. Divergences eventually dissipate over time. For example, 3 weeks ago, there was a brief divergence before RI began trending higher and price eventually followed. The current divergence with RI trending downward and price upward could suggest that price may eventually follow suit to the downside.”
Price weakness was solidified on Sunday as miners began sending a heightened amount of bitcoin to exchanges.
Per CoinDesk, “on Sunday, 784 BTC were transferred to exchange wallets from miner wallets – significantly higher than the 30-day average daily outflow of 265 BTC, according to data source Glassnode.”
However, since the halving, bitcoin has seen hidden large buyers, i.e. whales, use price declines as buying opportunities, thus buoying price.
For example, last week, MicroStrategy’s MSTR CEO, Michael Saylor, articulated how his firm acquired $175 million worth of bitcoin over a 74 hour period and was ready to buy up to $50 million worth of $BTC if price slid 1-2%.
Thus, despite the rocky start to the week, bitcoin’s lower price could incentivize hidden whales to participate further.
Disclosure: The author owns bitcoin, ethereum, and solana. He is also the editor of the Weekly Jab newsletter.