Whale Cycle

How to identify a cycle bottom

BestFees Editorial
15 min read
Published: November 20, 2025

Practical bottom-finding framework using forced selling and whale signals.

bottomsframeworksignals

Introduction: Bottoms Are Processes, Not Points

Investors chase “the bottom tick,” but cycle bottoms form through structural processes: forced sellers exhaust, whales accumulate, cost baselines re-base, and holder cohorts improve. Price confirms late. The goal is not precision knife-catching; it is to identify the structural turn early enough to execute with discipline.

This article provides a practical framework for bottom identification, anchored in multi-signal resonance: forced-selling dynamics, buy/sell ratio persistence, LTH/STH repair, Realized Price alignment, price–flow divergence, and wallet cohorts. It ties to companion pieces:

1) Forced Sellers: Recognize Supply Release and Exhaustion

Bottoms rarely happen without forced sellers: liquidation cascades, redemption cycles, miner cash-flow selling, and risk-budget resets. Key exhaustion clues:

  • Liquidation prints taper; OI stabilizes.
  • Funding and basis normalize from extremes.
  • Exchange net inflows moderate; taker buy volume increases.

See: Forced seller patterns in crypto.

2) Buy/Sell Ratio: Persistent Elevation in Long Windows

Short windows spike; long windows confirm. Look for:

  • Cross-venue buy/sell ratios >1 sustained over 3–7 days.
  • Stability of tempo; fewer whipsaws.
  • Alignment with rising taker buy volume and improving order-book depth.

See: Buy/sell ratio signals.

3) LTH/STH Repair: Holder-Quality Upgrade

Structural repair requires chip transfer to strong hands:

  • LTH adds/holds; STH sell pressure fades.
  • UTXO age distribution shifts toward older bands; dormancy stabilizes.

Combine with cost baselines:

4) Realized Price: Re-basing Near/Under Spot

Realized Price is the market’s cost baseline. During panic, spot can dip under Realized Price; post-shakeout, Realized Price repairs toward/above spot as chips consolidate in stronger hands.

See: Realized price vs market price: bottom detector.

5) Price–Flow Divergence: Trust Structure Over Candles

When price remains weak but structure strengthens—ratios elevated, cohorts improving, Realized Price repairing—we label it fake-weak. Conversely, when price rises but structure is thin—ratios flat, cohorts stagnant—we label it fake-strong. Let structure lead; use price as confirmation.

See: Whale activity divergence vs BTC price.

6) Wallet Cohorts: Whale Supply and Accumulation Trend

Track whale supply, net position change, and Accumulation Trend Scores. Rising whale supply during fear is a strong signal of structural repair. Beware exchange/custody address artifacts; confirm with execution-side signals.

See: Glassnode whale wallet metrics explained.

7) Integrated Checklist: The Bottom Framework

Weekly checklist:

  • Forced-seller exhaustion: liquidations down; OI/funding/basis normalize.
  • Buy/sell ratios: >1 in long windows across 3–4 venues.
  • Cohorts: LTH adds/holds; STH sell pressure easing; UTXO older bands rising.
  • Realized Price: near/under spot with repair starting.
  • Price–flow divergence: structure strong; price weak or lagging.
  • Whale supply: net position positive; Accumulation Trend Score rising.

If 4+ items are positive, structure-first execution is justified.

8) Case Studies: May–July 2021, June 2022, November 2025

Case A: May–July 2021

  • Forced sellers cleared; buy/sell ratios elevated; LTH improved.
  • Realized Price repaired; whale supply rose.
  • Outcome: trend confirmation followed structure.

Case B: June 2022

  • Contagion with staggered redemptions; uneven repair.
  • Framework avoided early overexposure; entries staged.

Case C: November 2025

9) Execution: Tranching, Budgets, and Hedges

Principles:

  • Tranching: scale entries as structural signals persist.
  • Budgets: cap risk until full confirmation; expand with each positive checklist item.
  • Hedges: use basis/option overlays when forced sellers remain active.

10) Pitfalls: Single-Indicator Reliance and Sentiment Bias

  • Don’t rely on one metric; seek multi-signal resonance.
  • Sentiment-only decisions misread fake-weak/fake-strong regimes.
  • Avoid single-venue ratio interpretations; whales fragment execution.

11) Dashboard: Make the Framework Operable

Include:

  • Liquidations, OI, funding, basis.
  • Cross-venue buy/sell ratios (short/long windows).
  • LTH/STH, UTXO ages, dormancy, CDD.
  • Whale supply and net position; Accumulation Trend Score.
  • Realized Price vs spot; price–flow divergence trackers.

Start with: Whale Transactions 2025 Dashboard.

12) Institutional Overlay: Governance and Liquidity

Institutions embed the framework into governance: approvals, risk-budget resets, and liquidity mapping. Structure-first entries via TWAP/VWAP/OTC reduce signaling and improve average cost.

See: How institutions buy bottoms.

13) Conclusion and Next Steps

Cycle bottoms emerge from structural repair. Forced sellers create liquidity; whales and LTH consolidate chips; cost baselines re-base; price follows. Use the framework to act with discipline, not emotion.

Continue with: