Bitcoin eyes 'textbook' bottom as $16K whale cost basis comes into play

Bitcoin (BTC) has a new downside price target as more research highlights the potential role of whales in setting a macro floor.

In the latest edition of its weekly newsletter, "The Week On-Chain," analytics firm Glassnode provided fresh insight into Bitcoin's "whale cost basis."

Aggregate price paid joins whale support lines

BTC price action is currently all about sideways movements and some of the lowest volatility ever seen.

As analysts prepare for big changes, however, Glassnode is considering where the current bear market might bounce.

Looking at whale buying and selling, "The Week On-Chain" showed a de-risking event in August following the current macro lows of $17,600 seen in June.

This phenomenon copied behavior from 2019, and if history repeats, an "equilibrium" period should now be ensuing for whales where selling becomes buying.

"In addition to the relative neutrality across small to medium-address cohorts, the Accumulation Trend Score for whales holding 1k-10k BTC highlights aggressive accumulation since late September," Glassnode explained.

"Whales owning >10K BTC are biased towards weak distribution over recent months."

As such, under current circumstances, the aggregate price paid by whales for their Bitcoin is $15,800 — a solid potential safety net should the market go for a bearish bottom.

"By price stamping the deposits and withdrawal volumes of the whale cohort (1k+ BTC) to/from exchanges, we can estimate the average price of Whale Deposits/Withdrawals since Jan-2017. This Whale cost basis is currently around $15.8k," Glassnode added.

Costs basis sets a price precedent

As Cointelegraph reported, other research is also eyeing how Bitcoin's largest investors shape price action.

Related: Biggest mining difficulty spike in 14 months — 5 things to know in Bitcoin this week

Analytics platform Whalemap revealed $19,000 to be the key support zone of the moment based on whale buy-ins, a line in the sand which has since held. 

Resistance in the form of $20,380 has also dictated the extent of intraday upside.

In its own monthly newsletter, "The Bitcoin Monthly," investment giant ARK Investments meanwhile put Bitcoin's overall investor cost basis at $19,000.

Regardless, expectations continue for a capitulation to give the market a new macro low sooner rather than later.

"In many ways, many on-chain metrics, market structure, and investor behavior patterns are dotting of the i's, and crossing the t's for a textbook bear market floor," Glassnode concluded.

"A principle piece which is missing is duration, of which history would suggest there may be several months still ahead before a full recovery."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.