The transparency blockchain allows fundamental analysts to see when whales load up on Bitcoin, but it can’t tell when techniques take a turn. However, whale behavior could still be the key to understanding price action.
Right now, the whales of longtime crypto exchange Bitfinex have racked up one of the biggest collective long positions ever. Past data shows that these signals are rarely incorrect and that monitoring whale positions can help understand when the tide is about to change.
Bitfinex Bitcoin whales last a very long time, but are they generally right?
In finance, a whale is a market player who trades with enough size and capital to make a splash in price action. It was these whales that sold the top of the recent Bitcoin price rally as the rest of the market was still bullish. And it is also these whales that are now at the forefront of cryptocurrency.
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Some crypto trading platforms offer advanced products such as derivatives, leverage, or long and short positions. Rather than buying and selling, traders can go short to hedge cash holdings or try to add long positions with every drop – the strategy is almost endless.
The pioneer Bitfinex trading platform traders are extremely long – near record highs of long positions on the platform known for whales.
Bitfinex whales have only been wrong once in years | Source: BTCUSDLONGS on TradingView.com
Bitfinex is home to many whales, the most famous Joe007 which gained notoriety for aspiring to $ 6,500 BTC in 2019, but bypassing the coin at the end of 2020.
The positions these whales take can be so important, TradingView developed charts to watch features and shorts on the exchange. With the metric returning close to historic highs, it is clear that the whales are expecting the price of Bitcoin to rise. But will they be right?
Looking back, whenever long positions hit the green box above, Bitcoin has seen a major rebound back up into the bear market. Each “background” was marked by an influx of longs.
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Bitfinex traders are once again betting big on December 2018 and December 2019 funds correctly. It wasn’t until Black Thursday that these whales got it wrong, but the black swan event shocked the world and no one saw it coming.
The last time the long delays were this high, the price of Bitcoin went from $ 12,000 to $ 64,000 in less than a year. As these whales regain such a large long position, does this indicate a rebound and new highs? Only time will tell, but we will continue to monitor whale behavior closely.
Source: Blockchain Whispers
It should be noted that the rest of the market is not as convinced as Bitfinex. However, the platform itself is where some of the most important transactions are made due to the low leverage provided by the platform. While players prefer 100x and highly leveraged derivatives, whales stick to modest amplification in exchange for capital protection.
With only 3x leverage, these long positions can usually withstand a deep drawdown without having to hedge, so the odds of another downward push are still high despite the whales being prepared.
Featured image from iStockPhoto, Charts from TradingView.com