You are not logged in.

#1 03-09-2020 12:32:21

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2910

The Whale index and Bitcoin's price

The Whale index and Bitcoin's price

Bitcoin has lagged behind gold this year and has also consolidated more than usual. For some traders, this is the sign of a mature market. For others, it is a sign of "fatigue" - a bearish concept before a decline occurs.

Nevertheless, a close look at the Whale Index roughly explains what happened 3 years ago when Bitcoin reached almost $20,000 and also what has happened so far this year.

What is the Whale Index and what does it show?

It is an index that counts the number of unique Bitcoin addresses that have more than a thousand Bitcoins. This is important because if we use the July Bitcoin price average, we see that each address has about 11 million dollars worth of Bitcoins. Therefore, the measure, or index, shows the interest of traders in Bitcoins, investors whose net worth is higher than that of the usual individual trader.

In the above chart, the two lines show the price of Bitcoin in USD (the black line) and the number of addresses with more than one thousand Bitcoins. It can be said without a doubt that the latter leads the former. From left to right, every time the green line passes over the black line, the price of Bitcoin eventually skyrockets.

Judging by this measurement, it is more important for traders to continue to track the number of whales to monitor the interest of the digital coin. Since the number of addresses worth more than a thousand Bitcoins is higher than the price line, the implications are that the price of Bitcoin will follow and rise as it has in the past.

However, there is a catch: the scale. A chart like this is easily manipulated by converting the scale to create the conclusion you want to give. Therefore, it should be considered with care.

There seems to be a clear and renewed interest in cryptocurrencies. With the falling USD, many are seeking shelter in alternative investments - traditional, such as gold, or newer alternative, such as the Bitcoin or the Ripple.

However, as more and more trades take place offline, tools such as the Whale Index are becoming less effective. A trader or investor needs to understand the dynamics of the market before entering it, and the digital market is one of the most opaque in the world for one reason: it is unregulated.

"Anything worth having is worth going for - all the way." - J.R. Ewing



Board footer