BTC whale population shrinks to early 2020 levels — 5 things to know in Bitcoin this week

Blockchain

Bitcoin (BTC) keeps pushing for a bullish end to February as the monthly close starts another week’s price action.

The largest cryptocurrency looks set to preserve its gains as it closes the second month of 2023 — and is keeping bulls’ hopes alive in the process.

Can the good times continue? The coming week could mean decision time for a key area of BTC price action around $25,000.

Analysts are eyeing a breakout toward $30,000 if support can become more permanent, while concerns nonetheless remain that a trip back towards resistance reclaimed in January is still on the cards.

Amid a quiet week for macroeconomic data, any catalysts for determining whether BTC/USD goes up or down may come from within Bitcoin itself.

One thing is for sure, on-chain data shows — long-term Bitcoin hodlers are in no mood for selling yet, and at current prices continue to add to their BTC exposure en masse.

Cointelegraph takes a look at some of the major factors to bear in mind when it comes to what Bitcoin might do in the coming week.

Bitcoin monthly close precludes March trend showdown

It looked touch-and-go into the weekend, but Bitcoin has managed to avoid a major retracement and reversed upward into the new week.

A weekly close at around $23,500 was music to the ears of those keen to see a bullish rebound sooner rather than later.

“BTC has managed to break back above the ~$23400 level which is the Range High of the macro Monthly Range,” popular trader and analyst Rekt Capital explained.

“This is what BTC needs to keep doing for a bullish bias as February nears its end. Upcoming Monthly Close will be very interesting.”

BTC/USD annotated chart. Source: Rekt Capital/ Twitter

At current levels, BTC/USD is up around 1.25% in February 2023 — modest by historical standards but still conspicuous in preserving the year’s gains.

For Rekt Capital, March marks the real make-or-break month for BTC/USD as it approaches a long-term trend line, a break of which would signal a full trend reversal.

“February nears its close & indeed not too much excitement for BTC, as has historically been the case for a pre-breakout Monthly Candle,” he continued.

“Given how the Macro Downtrend is a sloping trendline, the breakout price for BTC will be a little lower in March at ~$24500.”

BTC/USD annotated chart. Source: Rekt Capital/ Twitter

A further post reiterated $25,000 as the level to break in order to “confirm” a macro uptrend.

Fellow trader Crypto Chase was more categorical about short-term price action. In a tweet overnight, he likewise flagged $25,000 as the line in the sand.

“Perfect tag of 22.7 and bounce. Weekend move though.. I wouldn’t be surprised to see another retest of the 0.618 or a 3rd drive,” he commented about the weekend lows.

“At that point, it becomes make or break for me. Hold and we can still see 25K+ liq, lose it and 20K next.”

Trading resource Stockmoney Lizards meanwhile described a “short term bullish reversal” for both price and relative strength index (RSI) on the 4-hour chart as the weekend drew to an end.

Macro focus flips to central bank liquidity

In a refreshing change to the previous two weeks, U.S. macroeconomic data releases will be more subdued at the start of March.

As Cointelegraph reported, however, analysts are increasingly eyeing counterpart releases from Asia as a potential BTC price influencer.

Central bank liquidity injections — running contrast to the Federal Reserve — remain a key topic.

“Global liquidity – projected to rise in 2023, but recently has pulled back,” popular commentator Tedtalksmacro tweeted on the day.

“- China injected ~$450Bn into money markets during December + January – US liquidity has flat lined, government liquidity has outpaced Fed QT recently. Markets are a product of liquidity * risk appetite.”

Macro liquidity comparison chart. Source: Tedtalksmacro/ Twitter

Tedtalksmacro nonetheless highlighted a potential countertrend in the form of Japan’s central bank, the Bank of Japan (BoJ), which he warned may yet resort to financial tightening to tame inflation.

“On Friday last week, Japanese core inflation printed at the highest level since 1981 –> fueling speculation that the BOJ will need to tighten after years of extremely easy monetary policy,” he noted.

Comparing U.S. macro asset performance to crypto following the January Consumer Price Index (CPI) data print, meanwhile, he added that crypto assets remained “stubborn” despite others beginning to move higher.

Macro asset comparison chart. Source: Tedtalksmacro/ Twitter

Analysis platform Mosaic Asset focused on the potential for the Fed to hike benchmark interest rates more than expected at its March meeting.

“With no signs that the economy is slowing and yet another inflation report running hotter than expected last week…that’s ratcheting up pressure on the Federal Reserve to keep hiking rates quicker and longer than markets are expecting,” it wrote in the latest edition of its updates series, “The Market Mosaic,” on Feb. 26.

“You can see that reflected in the odds of the next rate hike’s magnitude, where market implied estimates currently favor another 0.25% increase. But views are quickly shifting to the possibility of 0.50%, with more on the way while rates stay higher for longer.”

According to CME Group’s FedWatch Tool, the odds of a 0.5% hike instead of the 0.25% seen in February currently stand at 27.7%.

Fed target rate probabilities chart. Source: CME Group

Sellers see first week of net losses in 2023

While Bitcoin may be up over 40% year-to-date, the road to recovery for the average hodler remains a fragile one.

That is the conclusion of the latest data from research firm Santiment, which shows that last week’s mixed BTC price action still managed to deliver net realized losses among sellers.

Ether (ETH) saw the same phenomenon play out, marking the first week in 2023 where sellers lost out.

“Bitcoin & Ethereum are both having more traders sell at a loss than at a profit this week, the first such week so far in 2023,” Santiment commented.

“Historically, once the crowd is exiting their positions more frequently at a loss, bottoms are more likely to form.”

Bitcoin, Ethereum realized losses annotated chart. Source: Santiment/ Twitter

Sellers’ bad luck contrasts with the strategy still firmly in place for long-term holders, who continue to add to their BTC positions.

According to on-chain analytics firm Glassnode, hodlers’ net position change reached a new four-month high this weekend, reflecting the rate at which accumulation is occurring.

Bitcoin hodler net position change chart. Source: Glassnode/ Twitter

In addition, the percentage of the BTC supply which has now been dormant for at least five years is now higher than ever before at 28.24%.

Bitcoin % supply last active 5+ years ago chart. Source: Glassnode/ Twitter

Bitcoin revenue hits 8-month high

A broadly similar situation is currently being witnessed among Bitcoin miners.

Here, Glassnode data shows that on a rolling 30-day basis, miners are holding onto more BTC than they sell, but current prices are keeping the trend precarious.

While it would not take much of a price decrease to flip it back to net selling, current conditions remain far healthier than those seen in preceding months.

Bitcoin miner net position change chart. Source: Glassnode

A silver lining comes in the form of miner revenue, which while modest is nonetheless at its highest in eight months.

Bitcoin miner revenue chart. Source: Glassnode/ Twitter

Income was helped by ordinals fees, which in February crossed the $1 million mark.

Despite ordinals resulting in a “fuller mempool” for Bitcoin, research noted last week, miners have still managed to clear it, Glassnode shows.

Bitcoin mempool chart. Source: Glassnode

For Bitcoin whales, it’s early 2020

They may be responsible for some interesting events on exchange order books, but Bitcoin whale numbers are in fact dwindling.

Related: Bitcoin may only need 4 weeks to hit $30K as key monthly close looms

With price action still a good 65% below all-time highs, the biggest Bitcoin investors have not yet decided that now is the time to return to the market.

According to Glassnode, whale numbers are now at their lowest in three years — just 1,663 unique entities now control 1,000 BTC or more. Three years ago, in February 2020, Bitcoin traded at under $10,000.

Glassnode defines a unique entity as “a cluster of addresses that are controlled by the same network entity.”

At their peak in February 2021, there were 2,161 such whale entities.

Bitcoin whales chart. Source: Glassnode

“Clusters” of whale transaction activity can nonetheless offer an insight into support and resistance, even with depleted whale numbers.

As monitoring resource Whalemap notes, $23,000 remains a key price focus thanks to that whale factor this month.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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