An on-chain valuation was recently released, which suggests that Bitcoin may be entering a classic fraud phase in the market cycle. This is a dynamic that sets a trap for potential market participants hoping for a direct price recovery.
‘New whale’ surrenders, but market accumulation resumes
In a QuickTake post on CryptoQuant, a market analyst who goes by the pseudonym Sunny Mom explored signs that point to commonly occurring pitfalls within Bitcoin’s current market structure.
The cryptocurrency expert began by revealing that the recent large price correction was caused by a surge in realized losses for Bitcoin investors. In particular, the analyst identified New Whales, i.e. large BTC holders who bought late in the rally, as a key selling force. This is because they are moving to offload their positions and reduce their losses.
An increase in realized losses is usually a sign that local prices are forming a bottom due to the wipeout of weak hands, but Sunny Mom also cautions that such speculation does not mean much in this scenario as the current phase of the market cycle (cooling down phase) is one where buy-side strength can only be confirmed through data that is not currently available.
However, simultaneous accumulation is taking place among ‘smart money’ investors. As can be seen in the chart above, Sunny Mom points out that there is a momentum shift in the market pattern as the 30-day % change in the investor accumulation pattern changes from a negative reading to a positive value and the total balance of all whales shows signs of stabilizing and showing a slight upward direction.
All these positive developments have started to unfold within the $80,000-$95,000 price range amid market-wide panic, reflecting smart money investors finding this price range highly attractive and accumulating there accordingly.
Prices could bounce back in January to retest ATH — if all goes well
In particular, the bullish signs such as whale balance stabilization and accumulation patterns confirmed by Sunny Mom suggest that a local price bottom will be formed soon and a price rebound is possible in the short term.
However, on-chain analysts warn that this potential price rebound may not necessarily lead to a sustained upward rally. As we saw earlier this year, under the right conditions Bitcoin could post a price rally by January next year when a ‘lower high’ near ATH is formed, or the ATH value may be tested.
In particular, Sunny Mom warned that Bitcoin’s oldest holders, the ‘old whales’, remain inactive despite falling prices and increasing accumulation. This inactivity can create pitfalls where even a slight price recovery can trigger Old Whale selling activity, which historically signals the end of a market cycle. At the time of writing, the value of Bitcoin is $84,301, reflecting a loss of 1.09% over the past day.
Featured image from Pexels, chart from Tradingview
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