• Bitcoin price hints at a pullback as whales continue to dump their holdings.
  • Adding more bearish pressure is the fast-approaching Chinese New Year.
  • Veteran trader Peter Brandt flirts with the idea that BTC reached a market top

The rapid ascent of Bitcoin price above $35,000 due to Elon Musk’s involvement would have been bullish if the price stayed there. However, BTC is currently trading at $33,600 and hinting at a pullback. The bearish thesis is supported by several on-chain indicators and the upcoming Chinese New Year, which tends to lead to a brief correction based on historical data.

Bitcoin price might have topped out, suggests Peter Brandt

Peter Brandt, a well-known and respected trader, suggested that Bitcoin might have hit a market top. The trading veteran considered BTC price data from December 2017 to January 2018 and compared it to the price action seen over the past two months. 

BTC/USD 1-day chart Trading View
BTC/USD 1-day chart Trading View

Although the chart above is just an observation from Brandt, on-chain indicators concur that a pullback might be around the corner.
Santiment’s Bitcoin Holder Distribution metric shows that whales with 10,000 BTC to 100,000 BTC are selling or redistributing their tokens. Such market behavior indicates that prices could head lower in the near-term future. 

Indeed, the number of large whales decreased by 12.5% from November 2020 and 2.97% from January 2021, increasing the downward pressure behind the flagship cryptocurrency.

Bitcoin holder distribution

Bitcoin Holder Distribution chart

Interestingly, the Bitcoin price rally hit a top in July 2019 when whales holding 10,000 BTC to 100,000 BTC decreased by 12.82%. At press time, this drop is eerily similar and falls in line with the market top idea suggested by Peter Brandt.

IntoTheBlock’s In and Out of the Money Around Price (IOMAP) suggests Bitcoin price faces a critical area of supply around the $35,000 level where 700,000 addresses have previously purchased 415,000 BTC. Since holders within this price range are currently underwater, a price surge might be stunted as they will be inclined to sell and break-even.

BTC IOMAP

Bitcoin IOMAP

Adding more credence to the IOMAP chart is Brandt’s view of Bitcoin’s current market structure. Since BTC price is consolidating in a flag/pennant pattern, it should theoretically suggest a bullish breakout. However, Brandt adds,

“The fact that Bitcoin could not hold the initial thrust on Friday places the "half-mast" flag/pennant interpretation into doubt. I have seen instances over the years when the initial completion of a flag/pennant briefly halts, but BTC must get moving quickly for the flag/pennant interpretation to remain valid.”

He further adds that,

“It is NOT my preferred view, but I cannot help but notice the similarities between the current price action and the price action at the Dec 2017-Jan 2018 top.”

Chinese investors are off for holidays 

The Chinese New Year is typically met with high volatility in Bitcoin price due to reduced liquidity as most OTC services will be closed. In 2021, the New Year starts on February 12 and can last as long as a week. 

Historically, Bitcoin price drops during the holidays range from 8% to more than 15%. Hence, a downswing seems more than likely.

Based on the IOMAP cohorts, $32,000 is a significant support level as 434,000 addresses bought 192,000 BTC around this price level. However, due to mounting bearish pressure, this level could be breached easily, causing cascading short orders. In this case, $22,500 could be the next cushion where 4 million addresses accumulated 3.42 million BTC.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Will the FOMC minutes make or break Bitcoin’s uptrend?

Will the FOMC minutes make or break Bitcoin’s uptrend?

Ahead of the FOMC minutes release Bitcoin withdrawal from exchanges continued. Proponents expect the market to react to signs Fed members will continue with more aggressive interest rate hikes, increasing the pressure on Bitcoin price. 

More Bitcoin News

Why Cardano price action could see a 23% upswing soon

Why Cardano price action could see a 23% upswing soon

Cardano (ADA) price action is puzzling as, on the one hand, a continuation of the summer rally is still very much granted, but unfortunately, the recent pullback has not made it.

More Cardano News

Which Bullish setup is in play to trade ETC price action?

Which Bullish setup is in play to trade ETC price action?

Ethereum Classic (ETC) is trading inside a bullish right-angle triangle that forecasts  a breakout above $48.33 and a target at $52.44, with the monthly R1 resistance level in the middle as a pivotal point for some profit taking.

More Ethereum Classic News

Ethereum price could drop to $1,500 if bulls do not defend this level

Ethereum price could drop to $1,500 if bulls do not defend this level

Ethereum price shows a lack of buying pressure, which has led to a range formation. This development could tilt in bears’ favor if a certain support level is breached. 

More Ethereum News

Bitcoin: If bulls lose control here, BTC could revisit $21,000

Bitcoin: If bulls lose control here, BTC could revisit $21,000

Bitcoin price shows an interesting setup that could reveal its next move. On closer inspection,  its technicals support a bearish outlook for the leading crypto.  

Read full analysis

BTC

ETH

XRP