Bitcoin’s Monthly Plunge Exceeds 30% Amid Whale Activity Concerns
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Bitcoin’s (BTC) value has taken a hit, experiencing a 1.39% decline in just one day, leading to a total decrease exceeding 30% for the current month.
While the predominant factor for this downturn is attributed to the prevailing bearish market, recent on-chain data indicates that significant whale movements might be intensifying the pressure on BTC’s price.
According to blockchain analytics firm Lookonchain, a specific whale wallet (3NVeXm) has been depositing Bitcoin at Binance, coinciding with notable price drops. Initially, these deposits were relatively small but gained momentum in recent weeks.
The whale reportedly transferred 5,000 BTC to the exchange on February 11, followed by an additional 2,800 BTC only hours ago.
Lookonchain implied that these transactions could be impacting Bitcoin’s short-term price trends.
In their analysis, it was mentioned that each deposit from this wallet appears to be linked with a subsequent price decrease. An earlier warning about a deposit was followed nearly immediately by a more than 3% drop in BTC’s value.
As of the latest data, the whale’s wallet retains 166.5 BTC, equivalent to over $11 million at current prices. Large deposits to exchanges are usually seen as indicators of potential selling, as investors often transfer assets to trade or hedge their positions.
While correlation does not definitively establish causation, the scale and timing of these transfers may have heightened selling pressure in an already unstable market. During times of market sensitivity, even the anticipation of whale selling can prompt traders to adjust their strategies, further exacerbating downward movements.
The recent transfers arrive amidst significant distress within the Bitcoin market. One analyst noted that Bitcoin’s realized losses have surged to $2.3 billion, placing it among the most severe loss events in its history.
They further indicated that this level of capitulation has only been observed during a few specific instances in Bitcoin’s past.
It was pointed out that short-term investors, those holding Bitcoin for less than 155 days, are contributing largely to this capitulation. Investors who bought in at the higher price points of $80,000 to $110,000 are now facing substantial losses, suggesting that less experienced traders are exiting their positions.
In contrast, it appears that seasoned holders are not primarily responsible for this latest selling wave, as historically, this group tends to ride out downturns.
The analyst also remarked that past occurrences of extreme loss spikes have often led to recoveries, citing a previous rebound from $60,000 to $71,000 following a similar capitulation. However, they cautioned that this may only signal the onset of a prolonged decline, as temporary relief rallies can occur even in persistent bear markets.
Furthermore, other analysts have indicated that Bitcoin might still be experiencing the early phases of a larger bear cycle, which could lead to additional downside risks. Bitcoin’s realized price, noted at $55,000, has historically marked the low points of bear markets.
In prior cycles, Bitcoin has traded 24% to 30% below its realized price before finding stability. Presently, it remains above this threshold.
Historically, when Bitcoin nears its realized price, it tends to enter a period of sideways movement before recovery begins. Some analysts suggest that a deeper drop into the sub-$40,000 range could establish a more definitive market bottom.
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Gregory Russell
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