Recently, the largest investors in Bitcoin (BTC) have increased their reserves in line with the continued rise in prices, as the Glassnode number indicates.
The indicator, called the “whale supply shock,” is the ratio between the amount of bitcoin held by whales and fish. Whales are addresses from 10,000 to 100,000 BTC and fish from 0.001 to 1,000 BTC.
Increased shocks to the whale supply indicate a higher rate of whale populations compared to fish. Conversely, the decline in the supply of whales shows that fish accumulate bitcoins faster than whales.
BTC supply shock to whale vs price. Source: Glassnode
However, Whale Supply Shock tends to provide a “dimension of supply closed in whale wallets that could [influence] supply dynamics and therefore price,” Dor Shahar, network analyst at CryptoJungle, said in a tweet on Topic on November 1.
Bitcoin price correlates with whale activity
The shock of the whale show seems to have anticipated the macros of the bitcoin price. For example, the price of bitcoin reached around $65,000 in April, two months after the whale supply peaked in the session.
The calculation showed that the whales began distributing their coins among the fish, correctly predicting the upcoming macro horoscope and correction. As a result, the whale’s supply shock subsided, as shown in the diagram below.
BTC Whales Supply Shock comes with a price. Source: Glassnode
The recovery began after bottoming in mid-July, which indicates that whales are beginning to accumulate bitcoins again at a faster rate than fish. This coincided with the collapse of Bitcoin worth $30,000 on July 20, and it eventually reached a new all-time high of $67,000 three months later.
The correlation was also evident in February 2020, noted Shahar, who also mentioned that whales started distributing BTC “right before ATH,” adding:
“The same thing happened in May 2019: the whales accumulated to a certain point, when the population reached its peak. And again, just before the total loading, they began to distribute coins.”
BTC Whales Supply Shock peaked ahead of the May 2019 spot price peak. Source: Glassnode
Shahar cited the fractals mentioned in the chart and ruled out the continued recovery in the whale supply shock ratio as evidence of a “multi-month upward trend of accumulation.” He also notes that the whale census in October, when the price of bitcoin was around $62,000, is much lower than it was in April, and says:
“[This] may indicate a period of general accumulation or depletion of whale populations.”
Bitcoin is technically bullish
Shahar’s optimistic forecast for the bitcoin market came when the cryptocurrency recovered from below $60,000, which triggered a fresh test of its all-time high of around $67K.
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However, BTC price appears to have formed a classic bullish continuation pattern called Bull Flag. With that, the price appears to have broken out of its ongoing consolidation and increased as much as the previous uptrend, also known as the flagpole.