Bitcoin [BTC] just concluded an exciting week characterized by the return of volatility, and bullish demand. At the same time, the extended downside that has occurred for the last few weeks had BTC holders anxious about the short to mid-term outlook.
There is renewed hope and excitement now that Bitcoin bulls are back. However, there is one major situation that could hold back BTC’s upside or even erase the recent gains.
Notably, the U.S. Federal Reserve is slated to make an announcement regarding its next interest rate decision. An interest rate hike could spoof investors and lead to more price suppression.
Another instance of sell pressure would prevent Bitcoin from recovering back to the $30,000 range. Perhaps it could even push it back to the lower $20,000s.
But is there a chance that Bitcoin could avoid more downside? Well, whales and institutional investors have been participating, thus contributing to bullish momentum.
Are Bitcoin whales playing the market once again?
Bitcoin addresses holding at least 1,000 and 10,000 BTC pivoted on 11 September after previously contributing to sell pressure. This confirmed the bullish whale activity. However, in this case, we should be establishing whether there might be incoming sell pressure.
Source: Glassnode
Despite the whale accumulation, realized cap remains low, which means most of the buyers that bought BTC in the last 30 days are still not in profit. In other words, there is not much of an incentive to sell, hence the potential downside could be limited.
Meanwhile, the recent return of confidence in the market has been attracting a lot of new addresses. According to the latest Glassnode alerts, the number of new Bitcoin addresses just reached a new 5-year high.
The observation suggested that the recent resurgence of bullish momentum might be attracting a lot of retail investors. This could also highlight a potential risk in the next few days.
An unfavorable outcome in interest rates could render retail traders at the mercy of the whales. This is because retail might provide enough exit liquidity for the whales.
If the above outcome occurs, then there is a possibility that Bitcoin might give up recent gains despite the recent bullish divergence. On the other hand, it is also possible that most of the sell pressure is already priced in.
If that is the case, investors should expect a limited downside, potentially followed by accumulation as whales take advantage of the discount.
