The price of Bitcoin (BTC) is consolidating between $55,000 and $56,000 following the rejection at $61,000. Whale clusters suggest that one key level has to be defended to prevent a drop to the mid-$40,000 region.
According to the data from Whalemap, which tracks Bitcoin whale activity, $55,406 is a critical whale cluster support area.
If Bitcoin breaks below $55,406, analysts at Whalemap emphasized that a drop to $47,438 becomes the next likely move.
Bitcoin whale clusters. Source: WhalemapWhat are whale clusters and why Bitcoin could see a deeper correction
Whale clusters form when whales or high-net-worth investors buy or sell Bitcoin and do not move these coins thereafter.
Since whales tend to buy more on the dip to their entry level or sell at breakeven after a correction, whale clusters typically serve as support and resistance levels.
Since Bitcoin is currently hovering above $55,406, this level is considered an important whale cluster support area. Hence, Bitcoin has to remain above it in the short term to avoid a larger drop that may lead to cascading liquidations.
Bitcoin funding rates. Source: Bybt.com
From March 15 to 16, the data from Bybt.com showed that more than $2 billion worth of futures contracts were liquidated, resulting in the funding rate dropping back to normal levels.
Considering that the futures market reset, as long as Bitcoin comfortably remains above $55,406, the probability of a major correction decreases substantially.
Researchers at Whalemap said:
“55406 big level we need to hold. Otherwise, falling back to 47438 is likely. 47438 is pretty strong though.. A lot of whale wallets have acquired #Bitcoin at that level and are still holding.”
Still, if Bitcoin falls below $50,000 again, it enters a danger zone. The $45,000 to $47,000 range is a major macro support area.
With the risk of the 10-year U.S. Treasury rising, a potential drop below $50,000 could cause BTC’s near-term momentum to significantly weaken.
Based on these scenarios, there are expectations that the accumulation of Bitcoin above $55,000 would continue.
Not to worry, Stock-to-Flow (S2F) is on track
While Bitcoin is battling a crucial support area, BTC/USD is perfectly in line with the popular Stock-to-Flow (S2F) price model, which puts the year-end target at $100,000.
A pseudonymous trader known as “Rekt Capital” noted that not only is the S2F en route to its next target, it could potentially see upside deviations.
Stock-to-flow model with deviations. Source: Lookintobitcoin.com, Rekt Capital
The term upside deviation means when an asset overshoots the model price. The trader said:
“Upside deviations in #BTC’s price beyond the Stock to Flow line tend to precede Bull Market Tops $BTC has experienced 5 major upside deviations in its history In this current Bull Market, #Bitcoin will experience its 6th upside deviation.”
Short-term whale clusters can provide some context as to where BTC price may go in the near future, typically within a span of a week or two.
But long-term models like S2F can be used to verify whether the broader uptrend and upward momentum of Bitcoin are sustainable in the upcoming months and years.