Recent on-chain valuations have been released, suggesting that Bitcoin may be entering a classic deceptive phase of the market cycle, which could be a trap for potential market participants hoping for a simple price recovery.
The “new whale” has surrendered, but accumulation on the market has resumed
In a QuickTake post on CryptoQuant, a market analyst who goes by the pseudonym Sunny Mom examined typical signs of a trap occurring within Bitcoin’s current market structure.
Cryptocurrency experts first revealed that the recent significant price correction was caused by a sharp increase in realized losses by Bitcoin investors. In particular, analysts have identified New Whales, large BTC holders who bought late in the rally, as the key selling force as they seek to reduce their positions and cut losses.
While an increase in realized losses would normally signal a bottom in local prices as these weak hands are wiped out, Sunny Mumm also cautions that there is little basis for such speculation in this scenario, as at this stage of the market cycle (cooling-off), buy-side strength can only be validated with currently available data.
But there is also a simultaneous accumulation among “smart money” investors. As seen in the chart above, Sunny Mumm points out that there is a change in momentum in the market pattern as the 30-day % change in the investor’s accumulation pattern turned from negative to positive, while at the same time Whales’ total balance has gained stability and shows a slight upward trend.
All these positive developments started unfolding in the $80,000 to $95,000 price range while the entire market was in panic. This reflects that smart money investors find this price range highly attractive and are hoarding in it accordingly.
Prices could rise in January to retest ATH – if all goes well
In particular, the bullish signs identified by Sunnymom, namely the stabilization of the whale’s balance and the accumulation pattern, suggest that a regional price bottom may soon be established, leading to a price rebound in the short term.
However, on-chain analysts caution that this potential price rebound does not necessarily translate into a sustained bull market. As we saw earlier this year, if the right conditions are right, Bitcoin could record a price rally until next January, where it could form a “low” close to ATH, or perhaps even test ATH’s value.
Notably, Sunny Mum also warns that Bitcoin’s oldest holders, the “old whales”, remain largely inactive despite falling prices and increasing accumulation. This lack of activity can lead to a trap where even a slight price recovery can trigger selling activity in Old Whale, which historically signals the end of a market cycle. As of this writing, Bitcoin’s value is $84,301, reflecting a 1.09% loss over the past day.
Featured images from Pexels, charts from Tradingview
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