Thanksgiving Bitcoin Sell-Off

The crypto market doesn’t have the luxury of closing whenever there’s a holiday. One of the many attributes of being decentralized. This thanksgiving we were grateful for the gains we received this year, especially if you took profits on the way up. This recent setback is the first of either the beginning of a correction or the one step back to go two steps forward.

Bearish Case

Let’s look at the one on-chain metric that’s having everyone worried. We’re seeing selling pressure ready to do its thing as whales are moving large amounts of bitcoin into exchanges. According to CryptoQuant, the exchange inflow indicator, measuring the 144-block (around 24-hour) average of mean bitcoin deposits across major exchanges, has reached 2.5 bitcoin. This levels is the highest since March 20th. In other words, the average size of inward-bound transactions to trading platforms has risen to 8-month highs.

Bitcoin: All exchange inflow mean Source: CryptoQuant

When high levels of inflows happen the market tends to trade sideways or downwards due to investors mitigating risk. Anything above 2 indicates danger of a continuation of price drops and it’s something to keep an eye on.

Bullish Case

Bitcoin’s positive image stems from its now 8-month growth spurt versus its March crash, during which has consistently outperformed other macro assets. At press time, bitcoin is trading around $17k making its year-to-date return stand at 135% against 19% for gold and 12% for the S&P.

Is bitcoin replacing gold? Futures and fund flows says yes. Mike McGlone, Bloomberg Intelligence Chief Straregist says:

“Rising futures open interest and investor inflows in Bitcoin vs. the same declining for gold indicate the cryptocurrency gaining an edge for price appreciation”

He also believes that gold, trading at $1,790/oz, will rebound to $2k/oz and beyond. If stimulus gets passed on December then his prediction can very much come true.

Institutional investors haven’t gone away. They’re using this opportunity to accumulate as weak hands dump their position. Whalemap illustrates a new support level building around $16.5k.

Bitcoin whale clusters. Source: Whalemap

New whale clusters can be found at $16,694, $16,411 and $16,064. In the short-term $16,411 is the level to watch as there is sufficient buyer demand in the market to prevent a broader pullback. If tested, then we have clusters at $15,355, $14,914 and $13,740 that will serve as floors. This consolidation may last for weeks due to how fast we turbo charged on the way up.

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Cryptocurrency Research

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