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- Bitcoin whale activity has dropped considerably in recent times showing a lack of confidence among big investors.
- As the Ethereum Shanghai upgrade comes closer, experts predict a sell-off further as liquidity increases. ETH technical chart shows the possibility of another 25 percent correction.
After a strong start to the year 2023, the world’s largest cryptocurrency Bitcoin (BTC) has been consolidating in line with the broader cryptocurrency market. Over the last week, Bitcoin (BTC) has been facing strong selling pressure and is down by 4 percent on the weekly charts.
As of press time, BTC is trading 1.45 percent down at a price of $23,456 and a market cap of $456 billion. The current macro indicators such as rising inflation have been weighing down on Bitcoin and the overall crypto market.
Several market analysts expect the Federal Reserve to continue to increase interest rates going ahead leading to the possibility of an economic recession in the US. Well, if such a scenario pans out, risk-ON assets like Bitcoin and other cryptocurrencies will be the most impacted.
After its recent surge, Bitcoin has failed to move past $25,000 levels facing stiff resistance. Mike Mcglone, the senior commodity strategist at Bloomberg writes:
“Don’t fight the #Fed” was the dominant headwind for markets in 2022, and remains so in 1Q. Bitcoin $25,000 resistance may prove significant for all risk assets.
As the macro headwinds remain strong, McGlone explains that the trajectory shall remain downwards. On the other hand, the total number of Bitcoin whale addresses has continued to drop. On-chain data provider Santiment reports:
The amount of existing whale #Bitcoin addresses are continuing to sink, with 2,011 existing compared to 2,266 that existed one year ago today. 2,489 was the #AllTimeHigh set on February 8th, where prices jumped +70% in the following 10 weeks.
Alike Bitcoin, Ethereum shows signs of weakness
The world’s second-largest cryptocurrency Ethereum (ETH) has been moving more or less in trajectory with Bitcoin. Ethereum has also faced selling pressure over the last week and is currently trading at $1,645 levels with a market cap of $201 billion.
The Ethereum developers are now gearing up for the launch of the Shanghai upgrade ahead of this month. This is one of the most important network upgrades as it will unlock the staked ETH for withdrawal by investors. Some market analysts believe that this could put additional selling pressure on ETH as liquidity increases. However, on-chain data provider CryptoQuant has a contrarian view of this. It notes:
We believe there will be little selling pressure for ETH when staking withdrawals become available after the Shanghai upgrade. This is based on our analysis of the profit and loss of staked ETH. Two factors support the argument: 60% of staked ETH is at a loss, and the largest staking pool’s depositors are also at a loss.
Looking at the technical chart, Ethereum could be hinting at another 25 percent correction from the current levels. As we know, Ethereum is finding it increasingly difficult to break above the technical resistance level of $1,650-1,700. Each failed breakout at these levels in the past has resulted in a strong pullback.
If history is any indicator, Ethereum (ETH) holds the probability of correcting another 25 percent from the current levels to $1,250. But if the bulls surprise like the last time, any strong breakout above $1,650-1,700 will lead to a price rally to $2,000.
