A Bitcoin (BTC) whale placed a $100 million short on Bybit, according to the pseudonyms trader CL. It comes after different on-chain data points toward a whale-driven sell-off during the past week. Are they expecting a larger drop for Bitcoin in 2020?
Though the momentum of Bitcoin is still strong, there are many factors that make $16,000 an attractive area for sellers.
There is massive liquidity at $16,000, primarily because it is a heavy resistance level. But the level has faced relatively high buyer demand, stablecoin inflows indicate. Therefore, the battle between buyers and sellers at $16K makes it an area with high liquidity, which is compelling for sellers.
Increasing signs of whales taking profits
A seller aggressively sold BTC on Bybit on Nov. 15. Order flows show that there were sell orders worth around $3.5 million on average consecutively over several hours.
Based on the abrupt large-scale sell order, CL believes that this may result in two scenarios.
First, the seller could get engulfed and cause a squeeze, which might cause the BTC price to surge. Second, it could continue to apply selling pressure on Bitcoin. The trader wrote:
“Approx 2 hours ago, someone aggressive sold almost ~100M on Bybit, a 3rd of the sells are opens, personally pretty curious to see what happens if this seller/shorter does get engulfed, or if he is let free.”
Meanwhile, other big exchanges have spotted large deposits over the last day. United States-based cryptocurrency exchange Gemini saw a 9,000 Bitcoin deposit, according to CryptoQuant.
Whales normally utilize exchanges with strict compliance and strong regulatory measures, which include platforms such as Coinbase and Gemini.
Considering the large Bitcoin deposit into Gemini worth $143 million, a pseudonymous researcher known as “Blackbeard” said we should be cautious.
Just weekend volatility for Bitcoin or we should expect larger drop in 2020?
As CL said, Bitcoin’s current market structure is different from the previous one. For example, when BTC was at $16,000 in 2017, the market was extremely overheated with high volatility. The trader said:
“Back in 2017, when we pumped from 10k, 15, into 20k, we had OKEx weekly futures trade in 1000$ contangos, now we’re here with quarterlies only 100$ above.”
This time around, the rally seems to be more sustainable and gradual. Bitcoin has continued to see a staircase-like rally over the past months, which has made it to evolve into a prolonged uptrend.
Rather than a sharp spike followed by another steep uptrend, BTC has experienced upside followed by consolidation, and so on.
As previously reported, various data like Google Trends show there is still little interest from retail investors unlike in late 2017. On the other hand, there is rising evidence that Wall Street is starting to take notice.
Hence, there is a strong argument to be made that the ongoing rally is basically different from 2017 despite the current “extreme greed” market sentiment. The available supply of Bitcoin saw a drop due to the recent halving, as well as dwindling reserves on exchanges over the past year.
The Bitcoin futures funding rates are also neutral at around 0.01%, which means the market is not as overheated or overcrowded as it was in 2017. This trend could make the downside limited, particularly in the medium term.