The smart money being allocated to bitcoin bought the panic last week. Then it sold the rally to everyone else.
Whales of between 10 and 10,000 bitcoin accumulated heavily between February 23 and March 3, when bitcoin traded between $62,900 and $69,600, according to Santiment.
This window covered the worst of the war sell-off in Iran and the early stages of the recovery. When bitcoin hit $74,000 on Thursday, the same wallets started taking profits and have since unloaded about 66% of what they had just bought.
Wallets with less than 0.01 BTC have steadily increased their positions as bitcoin fell back below $70,000 on Friday and into Saturday. It is the classic pattern that Santiment marks as a warning sign. “When retail is buying while whales are selling, it typically signals that the correction is not yet over,” the firm said in a weekend note.
Glassnode data amplifies the problem. About 43% of bitcoin’s total supply is now at a loss, as each push higher runs into sellers who have been underwater for weeks or months looking to break rather than ride the rally. That’s exactly what happened at $74,000 when the rejection ran into a wall of supplies from both profit-taking whales and holders coming out on a cost basis.
Meanwhile, the broadly tracked Crypto Fear and Greed Index fell 6 points to 12 on Saturday, deep in “extreme fear” territory. It is one of the lowest readings since the crash in October.
The broader picture is a market that continues to produce impressive intra-week moves that is going nowhere on a monthly basis. Bitcoin touched $60,000 on February 6. It touched $74,000 on March 5. It is now at $68,000, about where it was three weeks ago.
Volatility is huge, but the net move is close to zero, which is what happens when every rally is sold by holders looking to exit and every dip is bought by retail chasing a bounce.
That dynamic is resolved in one of two ways. Either the sell-off exhausts itself, the underwater supply is absorbed, and bitcoin breaks out above $74,000 with conviction. Or the purchase exhausts itself, the retailer runs out of capital, and the $60,000 floor is seriously tested.
The whale’s behavior this week suggests that the big holders are betting on the latter.
