Technical analyst Ali Martinez said the drop in cryptocurrency prices allowed whales to accumulate more assets. In an article on X, Martinez reported that as the price of Bitcoin fell from $104,000 to about $90,000, 342 new wallets were created, holding more than 100 Bitcoins.
Martinez said that every time whales buy on dips, it is a manifestation of strong bullishness on Bitcoin. He added that price corrections are just a test of investors' resilience, and those who seize the opportunity are most likely to ride the next wave.
He said:
"This correction is a test of resilience, and if you get it right, you can ride the next wave. That's how the 1% works -- buying fear when the rest of the market is hesitant."
Meanwhile, whale buying during downturns is not entirely surprising. Crypto analyst Mac_D observed that Coinbase Premium surged at the same time as Bitcoin prices fell. Coinbase Premium describes the percentage difference between BTC prices on Coinbase Pro and Binance, and typically indicates when U.S. institutional investors buy. The rebound in Premium means that U.S. investors bought heavily when Binance saw a massive sell-off.
The analyst noted:
“This rebound suggests that U.S. institutional investors may adopt an aggressive buying strategy when excessive panic selling occurs on Binance, which has a higher proportion of small investors.”
Interestingly, Bitcoin wasn’t the only asset that investors bought as prices fell. Onchain data also showed that whales bought more than 100 million XRP as the token’s price fell and retail investors panic-sold.
Analysts' predictions come true as cryptocurrency prices rebound
Meanwhile, it now appears that the downtrend has ended, as prices of almost all crypto assets have surged in the past 24 hours. Bitcoin, which fell to around $94,000, has now risen by more than 6% to above $101,000.
As Bitcoin’s price rose, all other major market cap tokens followed suit, with XRP seeing the biggest gain of 18% over the 24-hour period, according to CoinMarketCap. SOL also rose 10%, while BNB, DOGE, and ADA rose 5%, 8%, and 13%, respectively.
Most analysts who predicted a rebound were not surprised. According to a Santiment analyst on Dec. 10, the FUD of traders who expected Bitcoin to fall below $90,000 was a positive sign that retail capitulation was coming. This is a good sign because prices tend to go against market expectations.
They wrote:
"Panic is starting to set in among traders. Some calls for $80,000-89,000 are appearing again on social media, which can be seen as a positive sign that retail capitulation is returning. Price action is going against popular expectations, which means fear is usually necessary for prices to rebound."
However, Cryptoquant founder Ki Young Ju explained the reason for the quick rebound, noting that BTC’s price corrections have been relatively minor in this bull cycle. He attributed this to steady demand from institutions and exchange-traded funds (ETFs).
Glassnode data also supports this, with analysts noting that the average drop since 2022 is -7.68%, while the overall drop is -16.24%. The maximum drop in this cycle is only -26.25%, which is much lower than the -71.15% between 2011 and 2013. This shows that this cycle is the cycle with the least volatility for Bitcoin.
Bitcoin bull cycle expected to last longer as distribution continues
As Bitcoin returns to over $100,000 again, people have begun to worry about how long this good time will last. Glassnode experts believe that the bull cycle is still in the middle and late stages, and there is potential for further price increases. They point out that cyclical long-term holders (LTHs) (excluding super LTHs that have held for more than seven years) now own less than 50% of the BTC supply.
Generally speaking, these LTHs hold most of the BTC at the beginning of the bull market, and at its peak, its supply will decline, with short-term holders (STHs) accounting for about 70% - 80%.
While ETFs have changed this dynamic somewhat, STH is still only about 50% owned, well below the 80%+ level seen at the market peak in 2021. However, distribution levels have improved over the past 30 days, with the long/short holder supply ratio falling to 3.78, the lowest level so far this cycle.
Meanwhile, data from Santiment shows that the average age of USD investments has been declining. This metric, which determines how long a wallet has held an asset, has fallen 31% in 60 weeks for Bitcoin, 22% in 14 weeks for Ripple, and 31% in 8 weeks for Dogecoin. The coins in wallets are getting younger, which means there is a distribution, and historically, bull markets have only ended when the average age starts to increase.