Analysis

Was This Week’s $1.15 Bitcoin Transaction a Sign of Selloff to Come?

BTC is currently sitting around $13,300. What will Bitcoin's next move be?

Bitcoin’s ‘Fear and Greed’ index has been skewed toward ‘greed’ for several weeks now as BTC prices hold steady over $13,000. However, users may be preparing to sell their coins in the instance that prices exceed another $1,000 milestone or two; but is Bitcoin capable of surpassing $14k or $15k anytime soon?

Of course, the answer is unclear; however, there seems to be some evidence that BTC holders could be getting ready to sell their coins.

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For example, while the BTC Fear and Greed Index remains definitively skewed toward greed, there seems to be a bit of fear creeping in. On Monday, October 25th, the index read at a measurement of 75: ‘extreme greed’; by today, the reading had slipped to 67.

Additionally, there is some possible evidence of coins being moved out of long-term custodial wallets. Earlier this week, one Bitcoin holder sent a record-breaking $1.15 billion.

While it is not completely clear who the owner of the coins is, crypto analytics platform reported that the address had been labeled as ‘Xapo Bitcoin wallet’. CoinTelegraph reported that the wallet may be operated by Coinbase Custody, which acquired Xapo’s institutional business in 2019.

Is it possible that the transaction was merely a logistical internal transfer of BTC from one corporate wallet to another? Of course. Then again, the movement may have also been the product of an institutional client’s desire to get coins into a more accessible position, possibly so that the BTC could be easier to sell.

A Climb to $14k Could Trigger a Sizeable Selloff

That being said, there has been much bullish institutional activity for Bitcoin over the course of the last two months. Asset management giant, Stone Ridge announced earlier this month that it would be investing $115 million into Bitcoin. Additionally, this month, payments giant Square announced a $50 million BTC investment; business intelligence firm Microstrategy announced a $425 million Bitcoin investment at the end of September.

Ben Samocha, Chief Executive of CryptoJungle.

These institutional investments were apparently made with the intention to buy and hold Bitcoin for the long term. However, it is also possible that some institutional investors may see BTC’s current price levels as the top of a smaller bull run, that while BTC is headed ‘to the moon’ over the long term, there may be a short-term opportunity to cash out now and buy back in if (or perhaps when) the BTC price dips.

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And while BTC may not be likely to fall very far from where it sits now, a number of analysts agree that a push to the $14,000 price point will likely trigger a sell-off.

Indeed, “there is a considerable amount of order book ‘asks’ in the $14,000 region,” said Jason Lau, Chief Operating Officer of OKCoin. An ‘ask’ ask is the price that sellers of an asset are asking for when selling the asset.

Jason Lau, Chief Operating Officer of OKCoin.

Ben Samocha, Chief Executive of CryptoJungle, also told Finance Magnates that $14,000 could bring a short-term change in the course of BTC’s price movement: “Bitcoin is showing a lot of strength, and there could definitely be a quick run to $14,000, which is the 2019 yearly high, and therefore is expected to be a strong resistance area,” he said.

Therefore, “over the short term I expect BTC to correct to $13,100 or even $12,450,” he explained, adding that “for longer time frames I am extremely bullish, while simultaneously being cautious of what’s to come with the elections and the [COVID-related] financial crisis.”

Bearish in the Short Term, Bullish for the Long Term?

But, will BTC be capable of reaching $14k anytime soon?

Jason Lau told Finance Magnates that “Bitcoin should close above that level on a weekly or monthly basis to confirm it is acting as support,” which may eventually “act as a springboard to new highs.

“We are almost at new highs for open interest for all BTC futures: $5.4B right now. Increasing volumes of CME’s Bitcoin open interest suggest that institutions have become more active in trading their regulated futures product too. With many new positions being opened, it suggests the market is still bullish at these prices. ”

However, not everyone is so optimistic about BTC’s possible climb to $14k in the near term. Token Metrics Founder and Chief Executive, Ian Balina told Finance Magnates that “we don’t see $14k insight in the next 30 days.”

“Our AI price predictions anticipate bitcoin to hover around $12,800 and $12,300 for the next month, with the peak being on November 3rd, the day of the US Presidential election.”

Still, there are many signs that point to a bright future for Bitcoin in the longer term.

Ian Balina, Founder and Chief Executive of Token Metrics.

“BTC is being driven up by adoption,” Balina told Finance Magnates. “PayPal is in crypto. Square and MicroStrategy added BTC to their balance sheet, starting a corporate hedging US dollar risk. Quantitative Easing and anticipation of another stimulus are causing investors and companies to look for alternative assets to hedge away the risk.”

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