Bitcoin Faces Potential Rally Trap As Smart Money Silently Reaccumulates — Details

A recent on-chain evaluation has been published, which suggests that Bitcoin may be entering into a classic deceptive phase in its market cycle, a dynamic that poses a trap for potential market participants expecting a straightforward price recovery.

‘New Whales’ Capitulate, But Market Accumulation Resumes

In a QuickTake post on CryptoQuant, a market analyst with the pseudonym Sunny Mom explored the signs typically indicative of a brewing trap within Bitcoin’s current market structure. The crypto expert began by revealing that the recent heavy price corrections have been driven by a surge in Bitcoin investors’ realized losses. In particular, the analyst had identified New Whales, i.e, large BTC holders who bought late into the rally, as the major selling force, as they have been moving to offload their positions and cut their losses.

While the rise in realized losses usually signals a local price bottom formation due to wipeouts of these weaker hands, Sunny Mom also warns that such conjecture holds no significant water in this scenario, because the current stage of the market cycle (cooling phase) is one where buy-side strength can only be verified with presently unavailable data.

However, there is a concurrent accumulation among the ‘smart money’ investors. As seen in the chart above, Sunny Mom notes there is a momentum shift in the market pattern, as the 30-day % change in investor accumulation pattern has flipped into positive values from negative readings, alongside the total Whales’ Total Balance showing signs of gaining stability and a slight upward orientation. All of these positive developments began unfolding within the $80,000-$95,000 price levels amid the market-wide panic, reflecting that smart money investors are highly attracted to this price range and are accordingly accumulating within it.

Price May Rally Into January To Retest ATH — If All Goes Well 

Notably, the bullish signs, i.e., whale balance stabilization and accumulation patterns identified by Sunny Mom, suggest that a local price bottom could soon be established, leading to a price rebound in the short term. 

However, the on-chain analyst warns that this possible price rebound may not necessarily extend into a sustained upward rally. In the right conditions are right conditions as seen earlier this year, Bitcoin may record a price rally into January next year, where a ‘lower high’ close to the ATH is formed, or perhaps the ATH value might even be tested.

Notably, Sunny Mom also warns that Bitcoin’s oldest holders, its ‘Old Whales’, remain largely inactive despite weakening prices and increased accumulation. This inactivity can result in a trap where even the modest price recovery may trigger Old Whale selling activity, which historically signals the end of market cycles.  As of this writing, Bitcoin is worth $84,301, reflecting a 1.09% loss over the past day.