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Large Buyers Indicate a Potential Bounce in BTC Despite FUD Regarding Chinese Regulation

Despite what looks like a sell-off yesterday following the renewed circulation of the usual China FUD, there has been an indication of large buyers taking advantage of this dip.

The Usual China FUD

Anyone who has been long enough in the blockchain from its birth would be very familiar with Fear, Uncertainty, and Doubt (FUD) as a key driver of 6th market sentiments. The market is a constantly moving market, i.e., it’s dynamic; it’s either down(sell) or up(buy). And one thing is for sure; there is no short supply of this key ingredient of market dynamics - FUD.

China FUD - the news of a ban - is as old as the earliest bull run of the market. For many old experienced players, the FUD is just another known attempt released every time the market rage high, usually aimed at shedding off some of the insane gains acquired at each height of a run. The recent FUD dates as far back as May 2017, and it’s not a new event.

China has banned Bitcoin trading within its territory since 2017 and went ahead to shut down some crypto companies still operating illegally the following year into 2019. So the recent news of a “New Ban” attempt isn’t exactly new for a fact as it was merely a reiteration of an earlier stance.

China State Council source of the recent FUD

51st meeting of China State Council Financial Stability and Development Committee minutes is the source of the recent FUD, which entered into circulation, spread fast, and crashed the market to a local low of $33 000 per BTC. 

BTC/USDT 4HR Timeframe on TradingView

The minutes read as follows:

crackdown on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.” 

This was only part of the second measure to resolutely prevent and control financial risks as obtained from the minutes. China’s crackdown on illegal activities is very much known, and the FUD generated from this is as baseless as it can get. One such group of people who are aware of the market reaction and are always the first to take advantage of the sell-off caused by this type of news are none other but the whales.

Large Buyers Stepped In

This investigative report by Cointelegraph indicates the action of these whales who kept on buying the dip. This was achieved by analyzing every client's position on the perpetual and futures contracts to obtain a clearer view of whether professional traders are bullish or bearish.

As indicated, whales and market makers on the OKEx exchange reached a 1.08 long-to-short ratio in the early hours of May 21, favoring longs by 8%. This displayed a lack of conviction. It is worth noting that this level was the lowest in 30 days. However, these experienced traders entered bullish positions over the day as Bitcoin retraced below $37,000, favoring buyers by 62%.

Another indicator of whale buying spree is the volume of buys occurring May 21 in 9 exchanges, including Binance, Bitfinex, Bitstamp, Kraken, FTX, Gemini, etc., as analyzed by Coinalyze.

Aggregate Bitcoin spot volume. Source: Coinalyze

By observing the data closely, there should be no doubt that whales and market makers aggressively bought the dip as spot exchange volumes surpassed $5.6 billion in four hours, even for a 12% price movement.

24hr trading volume per coin. Source: Coinalyze

24hr trading volume per coin has Bitcoin maintaining its lead with over $106.8 billion over the last 24hrs. This is a solid indicator of a rebounding market as this further solidifies the market resilience to China FUD.

What Are Whales Buying?

Many indicators may try to identify why whales kept buying the dip despite a solid bearish trend looming, new FUD, and generally bearish sentiment. of what may be likened to a weakened buying interest from retailers.

Bitcoin S2F

Bitcoin Stock to Flow (S2F) indicates how much value an asset holds as it relates to its scarcity. Bitcoin is the only currency in the world measured by this model and shows many promises in the future.

Bitcoin S2F at 64.5

Typically a higher S2F indicates a higher value. Compared to Gold, BTC S2F is currently at 64.1 and could reach as high as 113 when the halving comes in 2024, a concept not even Gold has.

BTC on the monthly chart

When you zoom out on the monthly chart, Bitcoin has been in an uptrend since 2020, a situation that may likely continue into its next having. At the time of this report, BTC is at $37, 000 a slight bounce from its local dip of $33,000. Will it go up more or retrace with a new FUD around the corner? No one knows for sure.

There may be numerous other reasons behind whales buying every time it takes a dip; however, it’s best advised that traders should be cautious with their trades as nothing is guaranteed.

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