Prominent on-chain analyst Will Clemente is weighing in on the strength of Bitcoin’s rally as the leading cryptocurrency soars above $47,000.
In a new issue of Clemente’s newsletter, the on-chain analyst says that crypto whales, or entities holding over 1,000 BTC, have massively accumulated over $5 billion worth of Bitcoin (BTC) in the last few weeks.
“One of the most interesting developments over the last 1-2 weeks has been the increase in the holdings of entities (forensically clustered addresses) with over 1,000 BTC (aka whales)… Since July 27th whales have added 107,150 BTC to their holdings.”
Clemente is also looking at the activities of long-term holders in an effort to determine whether Bitcoin’s rally above $47,000 is a bull trap or a dead cat bounce.
According to the on-chain analyst, the investor cohort is not showing behaviors similar to the December 2017-January 2018 bounce when Bitcoin printed a lower high at $17,000.
“During the 2017 dead cat (the scenario many seem to be basing this framework on), there was massive sell-off from market participants that hadn’t moved their coins in at least 6 months. They took exit liquidity on the first opportunity that they were given.
We are not in fact seeing that same behavior currently, invalidating the dead cat bounce narrative from an on-chain perspective thus far. Long-term holders are currently sitting tight and holding strong.”
The on-chain analyst is also looking at funding rates and the leverage ratio to potentially determine whether or not traders are heavily speculating on Bitcoin derivatives and futures markets.
According to Clemente, the funding rates and the leverage ratio are currently low, suggesting that the rally is possibly being driven by organic buying and selling in spot markets.
“The fact that funding is so low compared to where it was at the same price levels in February shows that this rally is much healthier, and spot-driven rather than derivatives. Leverage is also relatively low compared to when BTC was at the same price levels in February. Again showing this rally has been healthy.”
Although Clemente says he is seeing bullish on-chain signals, he highlights a laggard metric that could be viewed as a red flag.
“Lastly, we have the number of transactions, adjusted for movements between entities to filter out noise. [I’m] seeing a slow grind up in this but would like to see more follow through with higher prices.”
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