Key Points
- Bitcoin (BTC) is currently trading within a Bull Pennant formation, indicating potential price stability and eventual breakout.
- Bitcoin’s market stability may be enhanced due to the transfer of BTC holdings from smaller investors (“sharks”) to larger investors (“whales”).
Bitcoin (BTC) has been trading within a range of $68,350 and $71,500 this week. This indicates a period of uncertainty among traders about the next market direction.
Bull Pennant Pattern
The current price stability of Bitcoin appears to be within a Bull Pennant formation. A Bull Pennant is a bullish continuation pattern that happens when the price fluctuates inside a symmetrical triangle range after a strong uptrend. This pattern develops in three stages: pole formation, consolidation, and breakout.
As of March 29, Bitcoin has entered the consolidation phase of its current bull pennant pattern. This suggests that traders are evaluating the sustainability of Bitcoin’s ongoing bullish trend. This phase is characterized by reduced market activity, as shown by decreasing trading volumes.
Accumulation by Bitcoin Whales
Bitcoin’s current sideways movement coincides with the transfer of BTC from smaller investors, known as “sharks”, to larger investors or “whales”. Remarkably, the number of addresses with 100-1,000 BTC holdings, also known as sharks, has been decreasing since March 12.
This reduction in shark holdings corresponds with an increase in whale accounts during the same period. This also aligns with increased capital investments into U.S.-based spot Bitcoin exchange-traded funds (ETFs). Whales are entities that hold more than 1,000 BTC.
The redistribution of BTC from sharks to whales could improve market stability and possibly lead to a steady price increase over time. This is primarily due to the typical behavior of whales as long-term investors, who are less likely to sell their holdings, thus reducing market volatility.
Furthermore, if whales are accumulating in anticipation of future price increases, their activity could signal upcoming bullish market trends.
Potential Price Breakout
Bitcoin seems set to continue trading within the bull pennant formation in the near future. However, according to the rule of technical analysis concerning bull pennants, the price may break through the range’s upper trendline to target $97,600 by May.
On the other hand, on the weekly timeframe chart, Bitcoin’s relative strength index (RSI) suggests the market as overbought, raising the possibility of further consolidation or a correction in the coming weeks.
With just a few weeks before the halving, the price of Bitcoin risks correcting or consolidating inside the 1.00-0.786 Fibonacci retracement level range, defined by the circa $69,300-67850 area, in the coming weeks. However, a clear breakout above the 1.00 Fib line could drive the price toward the 1.618 Fib line or above $100,000.