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A shake-up among miners and feasting whales provide the backdrop for serious volatility in Bitcoin continuing.

Bitcoin (BTC) is circling $35,000 at the start of the week after a fresh dip panics weak hands and fuels a whale feast — what’s next?

After hitting $30,000 in a “capitulation bottom” event, a rebound to $42,000 had many thinking the worst was over for Bitcoin. The weekend proved them wrong.

Cointelegraph takes a look at five things which could help set the trajectory for price action in the coming days.

From weak hands to strong

Throughout the May sell-off, one process has reappeared over and over — new coins flowing to old hands.

In other words, those coins which moved at higher prices near to the $64,500 all-time highs have moved again at much lower prices. Their destination, via exchanges or otherwise, seems to have been large-volume investors (whales) or wallets with little history of selling.

Long-Term Holders are stacking through the dip. pic.twitter.com/0cpKPiaAy8

— William Clemente III (@WClementeIII) May 23, 2021

The phenomenon has been seen before during previous price dips, but the scale of the transfer this time has grabbed analysts’ attention.

It was noticed by PlanB, creator of the stock-to-flow Bitcoin price models, who argued that whales are now taking maximum advantage of new investors’ cold feet.

He uploaded a chart showing at what price each single bitcoin moved. For April and May 2021, trading habits are clear.

“In the chart you see at what price level each of the total 18.7M BTC was last moved. So what happened in May? Weak hands sold ~1M BTC in May at $30k-35k .. which they bought in April at $55k-60k: a staggering ~$20B loss,” he explained.

“The good news: these 1M bitcoin are in strong hands now.”

This panic selling appeared to be little match even for whales’ own clout. As Cointelegraph reported, large clusters of buy-ins between $50,000 and $60,000 were wiped out with ease as the market fell, this continuing all the way down to $30,000.

“For bitcoin veterans it is indeed unbelievable and embarrassing, but for noobs this volatility can be too much,” PlanB added in separate Twitter comments.

“We all know the kind of people that sold in May, look around you, these are always the same people.”

1-year record fear

With that said, it will come as no surprise that overall market sentiment in crypto — judged by factors which cover all participants — is extremely cautious.

On Monday, the Crypto Fear & Greed Index is measuring just 10/100, its lowest in over a year and even lower than during the $30,000 test.

Fear & Greed, a crypto-based analog of the same indicator used for the wider economy, uses a basket of factors to determine overall market sentiment at a certain time.

Its implications can be used to decide whether a market is oversold or conversely due for a correction at a given level.

On May 12, the Index still measured 68/100, a fairly middling level corresponding to “greed” on the market but still with plenty of room left before a correction could take hold.

The shakeout upended sentiment and therefore the Index, which subsequently fell to its lowest levels since just after the March 2020 cross-asset crash.

“The more fearful, the better the time to buy,” Steve Courtney, CEO and founder of education resource Crypto Crew University, summarized last week.

Courtney speaks for a growing number of longtime punters who argue that it is better simply to buy BTC at lower levels than give in to media narratives that focus only on short-term events.

“I am holding the most $BTC I have ever had by far,” popular trader Scott Melker revealed this weekend.

A record monthly 'gyration' for Bitcoin

At the time of writing, BTC/USD is hovering at around $36,600 — 1.5% up versus Sunday but 20% lower than the same time a week ago.

Traders’ patience is being tested. The initial $30,000 episode resulted in a rebound to $42,000, the site of February’s all-time high, but this failed to hold for long.

Instead, Bitcoin dipped back into the $30,000 corridor after mainstream media panic over comments from China over mining and crypto-based commerce. These levels have endured, as mainstream consumers are fed with more and more alleged risk factors.

“While you're concerned with FUD, Bitcoin simply continues to work as intended, securely producing block after block, like clockwork, following a deterministic supply schedule, controlled by no one, unstoppable since more than a decade,” Rafael Schultze-Kraft, co-founder and CTO of analytics service Glassnode, countered on Monday.

“Never lose sight of this amid the noise.”

That "noise" remains especially audible from mainstream publication, among which the phrase "gyrations" to describe volatility has returned as the mot du jour.

Schultze-Kraft's words meanwhile echo the feelings of well-known crypto names, and while super-bullish short-term price forecasts are currently few and far between, there is similarly no doubt about the overall trajectory.

Nonetheless, as Capriole Investments founder Charles Edwards notes, BTC/USD is currently on track to log the biggest monthly red candle in its history.

Stock-to-flow stays intact

Few long-term indicators provide such a calming view of Bitcoin like stock-to-flow.

Throughout the volatility this month, and indeed throughout all periods of volatile price action, stock-to-flow has remained the go-to resource for those seeking proof that it is all “business as usual” for Bitcoin.

As its creator, PlanB, underlined in recent days, this time is no different. Even its correction of more than 50% versus all-time highs did not make Bitcoin violate stock-to-flow’s predictions.

“Actual bitcoin price is at the lower bound of S2F model. Am I worried? No,” he summarized on Sunday alongside data from the model.

PlanB explained that in essence, BTC/USD has room to range approximately 50% around the all-time high in either direction and still conform to expectations.

“It is not OK if we stay at $32K for multiple months, but I expect BTC price to bounce back next days/weeks,” he added.

That would even permit the record monthly downwick and preserve the bull market. As Cointelegraph reported, depending on the stock-to-flow model used, the current four-year halving cycle calls for an average Bitcoin price of at least $100,000. So far, it has never been disproven.

Mining set for a major shake-up

The old adage “price follows hash rate” may need some extra time to prove itself to hopeful bulls.

This week, Bitcoin’s network fundamentals are still making sense of recent events, and their impact on miners appears to be more widespread than initially thought.

According to data from various resources including MiningPoolStats, Bitcoin’s hash rate currently measures 136.7 exahashes per second (EH/s), around 30 EH/s below all-time highs.

Other estimates put the hash rate more than 10 EH/s higher, but a precise figure is ultimately impossible to attain.

Bitcoin’s next automated difficulty readjustment, due in six days’ time, will meanwhile open up mining to more potential hashing power, incentivizing miners to come on board.

This may be sorely needed, as talk has turned to miners selling BTC en masse in recent days.

“I’ve effectively been able to confirm this. Miner selling is a huge driver of price action here. Make of that what you will,” Nic Carter, co-founder of data resource Coin Metrics, said in a series of tweets.

Carter touched on the China narrative, and forecast that mining operations would indeed end up being redistributed more evenly — but that this would come with a temporary price.

“Everything I’m seeing indicates an absolutely seismic shift of hashpower out of China and into the world at large,” he continued.

“It won’t be elegant or pretty but obviously it’s great for hashrate distribution (& likely carbon intensity).”