BTC Whale Population Shrinks to Early 2020 Levels – 5 Things to Know About Bitcoin This Week

Bitcoin (BTC) continues to push for a bullish end to February as the monthly close kicks off another week’s price action.

The biggest cryptocurrency looks set to preserve its gains as it closes out the second month of 2023 — and it’s keeping bulls’ hopes alive in the process.

Can the good times continue? The week ahead could mean decision time for a key area of ​​BTC price action around $25K.

Analysts are eyeing a breakout to $30,000 if the support can become more permanent, although concerns remain that a trip back to the resistance recovered in January is still in play.

Amidst a quiet week for macroeconomic data, any catalyst for determining whether BTC/USD rises or falls could come from Bitcoin itself.

One thing is for sure, the on-chain data shows – long-term Bitcoin hodlers are still unwilling to sell and, at current prices, continue to increase their exposure to BTC en masse.

Cointelegraph breaks down some of the key factors to consider when it comes to what Bitcoin might do next week.

Bitcoin Monthly Close Prevents March Trend Clash

It seemed impromptu over the weekend, but Bitcoin managed to avoid a major pullback and reversed higher in the new week.

A weekly close around $23,500 was music to the ears of those hoping to see a bullish rebound sooner rather than later.

“BTC managed to break above the ~$23,400 level, which is the high range of the monthly macro range,” popular trader and analyst Rekt Capital explained.

“This is what BTC needs to keep doing for a bullish bias as February draws to a close. The next monthly close will be very interesting.”

Annotated chart BTC/USD. Source: Rekt Capital/ Twitter

At current levels, BTC/USD was up around 1.25% in February 2023 — modest by historical standards, but still remarkable in preserving the year’s gains.

For Rekt Capital, March marks the true turning point for BTC/USD, as it approaches a long-term trendline, the break of which would signal a complete trend reversal.

“February is coming to an end and indeed there is not much excitement for BTC as has historically been the case for a monthly candle before the breakout,” he continuous.

“Given how the macro downtrend is a sloping trendline, the BTC breakout price will be slightly lower in March to ~$24,500.”

Annotated chart BTC/USD. Source: Rekt Capital/ Twitter

one more post reiterated $25,000 as the level to break to “confirm” an uptrend macro.

The other trader, Crypto Chase, was more adamant about the near-term price action. In an overnight tweet, he also flagged $25,000 as the line in the sand.

“Perfect etiquette of 22.7 and bounce. Weekend move though.. I would not be surprised to see another retest of the 0.618 or a third unit,” he commented about the lows of the weekend.

“At that point, it becomes make or break for me. Hold and we could still see 25K+ liq, lose it and 20K to follow.”

Meanwhile, trading resource Stockmoney Lizards described a “short-term bullish reversal” for both price and the relative strength index (RSI) on the 4-hour chart as the weekend drew to a close.

Macro focus shifts to central bank liquidity

In a refreshing change from the previous two weeks, US macroeconomic data releases will be more subdued in early March.

As Cointelegraph reported, however, analysts are increasingly eyeing Asian counterpart releases as a potential BTC price influencer.

Central bank liquidity injections – in contrast to the Federal Reserve – remain a hot topic.

“Global liquidity – projected to increase in 2023 but has recently receded”, popular commentator Tedtalksmacro tweeted in day.

“- China pumped ~$450B into money markets during Dec + Jan – US liquidity has stalled, government liquidity has surpassed Fed QT recently. Markets are a product of liquidity * risk appetite.”

Macro liquidity comparison chart. Source: Tedtalksmacro/ Twitter

Tedtalksmacro, however, highlighted a potential countertrend in the form of Japan’s central bank, the Bank of Japan (BoJ), which he warned could still resort to financial tightening to tame inflation.

“On Friday of last week, Japanese core inflation hit the highest level since 1981 –> fueling speculation that the Bank of Japan will need to tighten after years of extremely loose monetary policy,” he said. observed.

Comparing the performance of US macro assets to crypto after the January Consumer Price Index (CPI) data print, meanwhile, it added that cryptoassets remained “stubborn” despite others starting to rise.

Macro asset comparison chart. Source: Tedtalksmacro/ Twitter

Analysis platform Mosaic Asset has focused on the potential for the Fed to raise benchmark interest rates more than expected at its March meeting.

“No signs that the economy is slowing down and yet another hotter than expected inflation report last week… series of updates, “The Market Mosaic”, on Feb 26th.

“You can see this reflected in the odds on the magnitude of the next rate hike, where market implicit estimates currently favor another 0.25% hike. But views are rapidly shifting towards the 0.50% possibility, with more on the way as rates remain higher for longer.”

According to the CME Group’s FedWatch Tool, the odds of a 0.5% increase instead of the 0.25% seen in February are currently at 27.7%.

Fed target rate odds chart. Source: CME Group

Sellers see first week of net losses in 2023

While Bitcoin may be up more than 40% year-to-date, the road to recovery for the average hodler remains fragile.

That is the conclusion of the latest data from research firm Santiment, which shows that the mixed BTC price action over the past week still managed to generate net realized losses among sellers.

Ether (ETH) saw the same phenomenon play out, marking the first week in 2023 that bears lost.

“Bitcoin and Ethereum are seeing more traders sell at a loss than at a profit this week, the first week of its kind so far in 2023,” Santiment commented.

“Historically, since the crowd is exiting their positions more often at a loss, bottoms are more likely to form.”

Annotated Graph of Bitcoin, Ethereum Perceived Losses. Source: Santiment/Twitter

The bad luck of the sellers contrasts with the strategy still firmly in place for long-term holders, who continue to increase their BTC positions.

According to on-chain analytics firm Glassnode, hodlers’ net position change hit a new four-month high this weekend, reflecting the rate at which accumulation is taking place.

Bitcoin hodler net position change chart. Source: Glassnode/Twitter

Furthermore, the percentage of the BTC supply that has been dormant for at least five years is now higher than ever at 28.24%.

Bitcoin supply % last chart active for more than 5 years. Source: Glassnode/Twitter

Bitcoin revenue hits 8-month high

A broadly similar situation is currently being witnessed among Bitcoin miners.

Here, data from Glassnode shows that, on a rolling 30-day basis, miners are holding more BTC than they sell, but current prices are maintaining the precarious trend.

While it doesn’t take a huge price drop to return to net selling, current conditions remain much healthier than those seen in previous months.

Bitcoin miner net position change graph. Source: Glassnode

A positive side comes in the form of the mining company’s revenue, which, although modest, is at the highest level in eight months.

Bitcoin miner revenue graph. Source: Glassnode/Twitter

Income was helped by ordinal fees, which in February passed the $1 million mark.

Despite ordinals resulting in a “fuller mempool” for Bitcoin, research observed last week, miners still managed to clear it, shows Glassnode.

Bitcoin mempool graph. Source: Glassnode

For Bitcoin Whales, It’s Early 2020

They may be responsible for some interesting events in the exchange’s order books, but Bitcoin’s whale numbers are indeed dwindling.

Related: Bitcoin May Need Just 4 Weeks to Hit $30,000 as Major Monthly Closes Approach

With price action still 65% below all-time highs, Bitcoin’s biggest investors have yet to decide that now is the time to return to the market.

According to Glassnode, the number of whales is now at its lowest level in three years – just 1,663 unique entities now control 1,000 BTC or more. Three years ago, in February 2020, Bitcoin traded below $10,000.

Glassnode defines a single entity as “a cluster of addresses that are controlled by the same network entity”.

At their peak in February 2021, there were 2,161 of these whale entities.

Bitcoin whale chart. Source: Glassnode

“Clusters” of whale transaction activity can, however, offer insight into support and resistance, even with the number of whales depleted.

As tracking resource Whalemap notes, $23,000 remains a key price focus thanks to the whale factor this month.

The views, thoughts and opinions expressed here are those of the authors only and do not necessarily reflect or represent the views and opinions of Cointelegraph.