Are whales capping Bitcoin price from an end-of-year rally amid FTX contagion?

• High-volume holders are keeping pressure on the Bitcoin price, stifling the recovery to $20,000.
• Only 1,938 whales hold between 1,000 and 10,000 BTC compared to 2,123 in June 2022.
• Bitcoin price erases most of its weekly gains as bulls seek support at $17,000.

The Bitcoin price is reeling into the weekend after facing sudden corrections from gains accrued earlier in the week. The largest cryptocurrency climbed to a monthly high of $18,380 on positive investor sentiment on the future of cryptoassets as the US Consumer Price Index (CPI) came in lower than expected.

On Wednesday, an expected 0.5% rate hike by the Federal Open Market Committee (FOMC) was a positive signal for the crypto markets, with analysts predicting that BTC will trade above $20,000 into the new year.

Bitcoin price plunges to $17,000 after audit firm Mazars stops working with crypto clients

Mazars, an international audit firm that works with Binance and other cryptocurrency exchanges, has temporarily suspended all engagements with its crypto clients. Binance, KUCoin and Crypto.com are the exchanges affected by the firm’s decision.

A statement published by Binance on Friday confirmed the rumor that it “will not be able to work with Mazars at this time.” Mazar’s report on Binance’s “proof of reserves” appeared to be overconfident. The report, which is no longer available on the auditor’s website, also did not show any of the largest stock exchange’s obligations.

Bitcoin price fell to $17,000 after the news from Mazars reverberated across the market on Friday. Binance has been making headlines this week for the wrong reasons, including rumors that the US Department of Justice is investigating the exchange and its top executives for money laundering.

It’s a sensitive time in the cryptocurrency industry, especially with regulators, stakeholders and government authorities pondering FTX’s collapse. New CEO John Ray III’s top priority is recovering assets belonging to the defunct exchange. Policymakers and regulators work to ensure that consumers are protected from the actions of a few inexperienced individuals.

Bitcoin price has decisive support, but for how long?

Bitcoin price attempted to break above a crucial downtrend line, as shown on the eight-hour time frame chart below. While this move could have pointed BTC northward to $20,000, the overhead pressure reversed the bullish spark too early on Friday, leaving Bitcoin unguarded at $17,000.

BTC/USD eight-hour chart

The bullish cryptocurrency fell below key moving averages such as the 100-day exponential moving average (EMA) (in blue) at $17,330 and the 50-day EMA (in red) at $17,196, suggesting that the declines may extend further.

Support at $17,000 remains crucial to resume the Bitcoin price uptrend. However, if bears push the price below the same level, BTC could return to the downside levels of $16,388 and the primary support at $15,650.

Insight from Santiment highlights increased sales activity among whales with coins between 1,000 and 10,000. Currently, only 1,938 addresses call this cohort home compared to 2,123 addresses in June 2022.

Bitcoin supply distribution

The chart above shows that the Bitcoin price coincides with the on-chain calculation, which means whales are significantly influencing the trend. Therefore, a rally at the end of the year may be a dream if large volume holders continue to empty their wallets.

On the upside, holding support at $17,000 could keep investors interested in BTC. If bulls push for a break above the descending trend line, as shown in the chart and succeed, the Bitcoin price could quickly close the gap to $20,000.