Bitcoin experienced a significant drop on Monday, with its price reaching as low as $36,200. This abrupt decline caused concern among the crypto community, especially after a period of recovery in the market. While the price has started to rise again, what led to this sudden plunge?
Profit-Taking By BTC Whales Triggers Decline
Following Bitcoin’s substantial increase from $27,000 to $37,000 over the past few weeks, it was expected that profit-taking would occur. However, the extent of the decline was largely influenced by the specific group of investors involved in the profit-taking.
According to a chart shared by crypto analyst Ali Martinez, major profit-taking was driven by large investors, commonly referred to as Bitcoin whales. These whales have been actively taking profits, having either moved or sold approximately 60,000 BTC over the past week. At current prices, this amounts to over $2.2 billion, explaining the significant impact on the price.
These large investors hold between 100 to 10,000 BTC, and data indicates that their holdings decreased from 8.61 million BTC to 8.55 million BTC within a week. Additionally, data from IntoTheBlock suggests that around 81% of all BTC investors are currently in profit, a substantial increase compared to about 50% a month ago. As more investors sell to secure profits, a decline in price is expected.
Bitcoin Price Needs To Hold $36,400
Crypto analyst Ali Martinez highlighted that Bitcoin’s price found support at $36,400 after the initial recovery. However, it is crucial for the price to maintain this support to avoid further decline.
Martinez suggests that if the price falls below $36,400, the next significant demand level would be at $34,300, implying a potential 5% drop from current levels. A further decline could even take the price back to $30,200. Nonetheless, Bitcoin is currently holding steady above $36,600, with a 39% increase in volume, indicating that investors might be taking advantage of the dip. If the enthusiasm surrounding a possible Spot BTC ETF continues, the price could likely resume its upward trend above $37,000 soon.
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