On Monday, the Bitcoin price began a spiral that saw it drop as low as $36,200. Naturally, this caused a stir in the crypto community which was starting to get used to the recovery trend in the market. The price has begun to increase once more, but what caused the plunge to $36,200?
Profit-Taking By BTC Whales Triggers Decline
Given that the Bitcoin price had risen so much in the last couple of weeks, going from $27,000 to $37,000, a good measure of profit-taking was expected to follow, and it looks like that’s what happened. But the investor cohort that led the profit-taking explains why the decline was so much.
According to a chart posted on X (formerly Twitter) by crypto analyst Ali Martinez, the major profit-taking was being done by large investors. These Bitcoin whales have been taking profits and over the last week, they have moved around or sold roughly 60,000 BTC. At the current prices, this 60,000 BTC is worth over $2.2 billion, which would explain why the price was impacted so much.
BTC whales sell holdings | Source: X
These investors are part of the 100-10,000 BTC, meaning addresses holding at least 100 BTC and 10,000 BTC. Last week, these addresses held around 8.61 million BTC. But by November 13, the holdings had dropped to 8.55 million.
Whales may not be the only cohort that has been participating in profit-taking, especially given the high profitability of Bitcoin holders. As data from IntoTheBlock shows, approximately 81% of all BTC investors are currently in profit, a large jump from about 50% about a month ago. So as investors sell to secure some profits, it is expected that the price will decline in response.
Bitcoin Price Needs To Hold $36,400
In a subsequent post, crypto analyst Ali Martinez revealed that the Bitcoin price had finally found support at $36,400 after it recovered. However, the bulls are not entirely out of the woods as they need to maintain the $36,400 support and risk falling lower.
Martinez posits that if the price were to break below $36,400, then the next significant level for demand rests at $34,300. This would mean an about 5% plunge from the current levels. But it doesn’t end there as a further plunge could take the price back to $30,200.
Source: X
For now, Bitcoin is holding steady above $36,600 which is a good sign. The volume has also seen a 39% increase, bringing it above the $18 billion mark, suggesting that investors took advantage of the dip to load their bags. If the excitement surrounding a possible Spot BTC ETF sustains, then the price could resume its uptrend above $37,000 soon.
BTC price falls to $36,200 | Source: BTCUSD on Tradingview.com
Featured image from Freepik, chart from Tradingview.com