Lately, Bitcoin's 

BTC

$20,671

 biggest investors have been upping their reserves in sync with the ongoing price recovery, one Glassnode metric suggests.

Dubbed as the "Whale Supply Shock," the on-chain indicator represents the ratio between the amount of Bitcoin held by "whales" and "fishes." Whales represent addresses that hold between 10,000 and 100,000 BTC, while fishes are those that hold anything between 0.001 and 1,000 BTC.

A rising Whale Supply Shock reading indicates a higher degree of accumulation by whales versus fishes. Conversely, a declining Whale Supply Shock shows fishes are accumulating Bitcoin at a faster pace than whales.

That said, the Whale Supply Shock tends to provide "a measurement of supply locked in Whales wallets which can have [effect] on supply dynamics and thus on price," stated Dor Shahar, an on-chain analyst at CryptoJungle, in a tweet on Nov. 1.

BTC price correlation with whale activity

The Whale Supply Shock appeared to have been predicting the macro Bitcoin price tops. For instance, the BTC price topped at near $65,000 in April, two months after the supply held by whales reached a sessional peak.

The metric showed that whales began distributing their coins among fishes, correctly predicting an upcoming macro top and correction. As a result, the Whale Supply Shock dropped, as shown in the chart below. 

It started recovering after bottoming out in mid-July, indicating that whales started re-accumulating Bitcoin at a faster pace than the fishes. That coincided with Bitcoin rebounding from around $30,000 on July 20 to eventually reach a new record high of $67,000 three months later.

The correlation was also visible around Feb 2020, noted Shahar who also stated that whales began distributing their BTC "right before the ATH," adding:

"Same phenomenon happened at May of 2019, whales have accumulated up to a certain point where the supply held by them reached a peak. Once again, right before the macro top they began to distribute coins."

Shahar cited the said chart fractals and ruled out the ongoing recovery in the Whales Supply Shock ratio as a sign of "a multi-month accumulation uptrend." He also noted that the supply held by whales in October, when Bitcoin's price was around $62,000, is much smaller than it was in April, saying:

"[It] might indicate accumulation period or a generally depleting supply held by whales."

Bitcoin technically bullish

Shahar's bullish outlook for the Bitcoin market appeared as the cryptocurrency recovered from under $60,000 to eye a retest of its record high at around $67,000.

Related: ‘Uptober’ closes at record high in best month of 2021 — 5 things to watch in Bitcoin this week

In doing so, BTC price appeared to have been forming a classic bullish continuation pattern called the "Bull Flag." That said, the price looks poised to break out of its ongoing consolidation range and rise by as much as the previous uptrend's height, also known as "Flagpole."

The Bull Flag's profit target comes to be above $70,000.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.