Whale accumulation slows down, Bitcoin struggles at the resistance level of $61,000
Analysts believe that the market is gradually recovering.Author: Mary Liu, BitpushNews
The financial markets were relatively calm on Tuesday, with no significant market catalysts ahead of this week's Jackson Hole global central bank conference.
Data from Bitpush shows that Bitcoin surged above $61,000 early Tuesday morning but failed to maintain the breakout, retreating to the support level of $59,000 after the lunch break. As of the time of writing, Bitcoin is trading at $59,341, with a 24-hour increase of 0.36%.
Additionally, most altcoins in the top 200 by market capitalization saw gains. The meme coin Brett (BRETT) had the largest increase, rising by 18%, followed by BitTorrent (BTT) and BinaryX (BNX), which rose by 16.4% and 12.3%, respectively. Litecoin (LTC) experienced the largest decline, dropping by 3.3%, while dYdX (DYDX) fell by 3.2% and MANTRA (OM) decreased by 2.6%. The overall cryptocurrency market capitalization currently stands at $2.11 trillion, with Bitcoin's market share at 55.7%.
In the U.S. stock market, at the close, the S&P 500 and Nasdaq indices fell by 0.20% and 0.33%, respectively, while the Dow Jones remained flat.
Whale Accumulation Slows
On-chain analytics firm CryptoQuant reports that "most" demand indicators are showing signs of weakness. CryptoQuant data indicates that larger BTC holders (equivalent to whales) have significantly reduced their accumulation rate since hitting an all-time high in March.
The report states: "The 30-day percentage change in whale holdings has dropped from 6% in February (the fastest rate since February 2019) to the current 1%. Historically, a monthly growth rate of whale holdings exceeding 3% has been associated with rising Bitcoin prices, but that is not the case currently."
However, one exception to the "summer slump" facing the market is the "permanent holders"—entities that only buy and never sell BTC.
The report notes: "Despite the overall slowdown in Bitcoin demand, permanent holders continue to accumulate Bitcoin at unprecedented levels. The total balance of these holders is growing at a record pace of 391,000 Bitcoins per month. The demand growth rate of permanent holders is even faster than when Bitcoin prices exceeded $70,000 in the first quarter of 2024."
Analysts: The Market is Gradually Warming Up
Bitfinex analysts believe that the market is gradually warming up. After a significant outflow of funds in early August, unlike the Ethereum ETF, Bitcoin spot ETFs saw a net inflow of $32.4 million last week, indicating sustained interest from passive investors, with BTC prices repeatedly breaking through the lower range of around $60,000.
They stated: "In the past week, there has indeed been some buying on dips and profit-taking in the ETFs, with investors buying at prices below $50,000 and then at least taking some profits. This contrasts sharply with the Ethereum ETF, which recorded net outflows this week despite Ethereum's price decline being much larger than Bitcoin's."
The inflows into BlackRock's iShares Bitcoin ETF (IBIT) and Fidelity's Bitcoin Fund (FBTC) have helped prevent further losses, which Bitfinex refers to as "passive demand," a term they use to define systematic investments in ETFs that occur regardless of price.
Analysts noted: "The difference in investment inflows for the Ethereum ETF reflects broader market confidence in Bitcoin as an asset, despite challenges such as potential BTC oversupply from the U.S. government and large holders like Mt. Gox. The fates of BTC and ETH ETFs are starkly different, highlighting the distinct dynamics of these two markets. While the Bitcoin ETF has successfully attracted sustained inflows, the Ethereum ETF has struggled to maintain momentum. The depletion of Grayscale's ETH supply could be a turning point for the Ethereum ETF, but the coming months will be crucial in determining whether demand can support this market."
The report adds: "It is also noteworthy that BTC is currently attempting to break through the lower range of a four-month period. Therefore, we are at a resistance level, and we do not expect any explosive movements in the near future due to the lack of potential catalysts, as summer weakness and insufficient liquidity remain prevalent."
Bitfinex states that by examining Bitcoin's historical performance post-halving, the following chart "indicates that despite recent declines, BTC continues to follow a trajectory similar to past bull markets and halving cycles."
They stated: "These patterns suggest that significant rebounds typically occur after halving cycles, even after short-term declines. As of the 230th day post-2024 halving (August 17), the year-to-date normalized return rate is 1.38 (38%)."
They pointed out: "During the same phase after the 2016 and 2020 halvings, our return rates reached 1.32 and 1.68, respectively; thus, the current adjustment is not unusual. Although the recent drop below $50,000 may be the last traditional adjustment post-halving, we still expect to follow the trajectory of past bull markets and possibly undergo one final adjustment in the third quarter, consistent with the trajectory after the 2020 halving."
Bitfinex analysts concluded: "It is expected that summer liquidity issues will persist. The broader macroeconomic environment, including potential interest rate cuts by the Federal Reserve, will also play a significant role in shaping the future liquidity of BTC and ETH ETFs. Investors should closely monitor these developments, as they can provide further insights into market trends."
