Bitcoin (BTC) could undergo one last bear market capitulation if “whales” — addresses that hold more than $1 million worth of Bitcoin — ramp up their selling pressure, according to on-chain analyst Willy Woo.
Room for another Bitcoin drop?
Woo assessed the average price at which short-term investors entered the Bitcoin market across history and charted the daily change in the value. That resulted in a cost basis, a metric that signals when “inexperienced” traders sell BTC to “experienced” traders during a BTC free fall, which typically coincides with the market bottom.
The cost basis underwent significant dips during the previous bear markets, also before strong accumulation took place, as shown in the chart below. Interestingly, Bitcoin’s ongoing correction — from $69,000 in November 2021 to around $39,000 in March 2022 — has not resulted in a massive drop in its cost basis.
Bitcoin short-term holder cost basis change. Source: Willy Woo
“It’s inconclusive whether we have capitulated yet,” said Woo, adding that “there’s room for another drop” based on the cost basis signal.
Whales have been selling their BTC
Woo’s outlook appeared in line with the rising speculations about Bitcoin’s next big drop. For instance, Christopher Yates, the editor at AcheronInsights, said BTC’s price could crash to $30,000 due to the “deteriorating macro environment.”
“What makes me increasingly wary that the low is not yet in for 2022 is the fact that we are yet to see a capitulation style spike in volume that has occurred at all the recent lows in late 2019, early 2020 and mid-2021,” Yates wrote in his latest BTC analysis, adding:
“Though not a prerequisite for a market bottom, such a capitulation-like spike in volume helps to give us confidence for when such a bottom may be near.”
Data resource Ecoinometrics provided evidence of the demand gap between small and rich Bitcoin investors in its latest weekly report. For example, it noted that addresses that hold as much as 10 BTC have been accumulating the coins in the past 30 days.
Bitcoin on-chain accumulation and distribution. Source: Ecoinometrics
Conversely, those that hold…