On-Chain Data Shows Bitcoin Whales Increasing Sales, Potentially Leading to Asset Decline
Recently, on-chain data has revealed that Bitcoin whales may have increased their sales, potentially causing a decline in the asset’s value.
According to an analyst in a CryptoQuant Quicktake post, the price of Bitcoin could correct towards the range of $31,000 to $32,000 due to the current selling pressure from whales.
The relevant indicator in this case is the “Exchange Whale Ratio,” which measures the ratio between the sum of the top 10 transfers to exchanges and the total exchange inflow.
Typically, the top 10 transactions going to these platforms come from whales, so this ratio can provide insight into how whale inflow activity is performing compared to the rest of the market.
These massive investors can transfer their coins to these centralized entities for various purposes, one of which could be selling. Therefore, if whales make up a significant portion of the total exchange inflows, it is a potential sign that selling pressure from this cohort is increasing.
Historically, surpassing the 0.90 mark has been a particularly negative indicator for the cryptocurrency. At this level, 90% of the total inflow comes from whale wallets.
Here is a chart showing the trend of the 72-hour Moving Average (MA) of the Bitcoin exchange whale ratio in recent months:
[Insert Chart Image]The 72-hour MA value of the metric appears to have increased in recent days | Source: CryptoQuant
In the above chart, the analyst has marked the 0.90 mark in red and highlighted the points in Bitcoin price that correspond to instances where the 72-hour MA exchange whale ratio crossed this line.
The analyst notes that cryptocurrency experienced some volatility in all these occurrences initially, followed by a short-term decline leading to a local bottom formation.
Given the timing, it seems possible that higher whale inflows in these cases were at least partially made for selling purposes.
The chart indicates that the indicator has recently risen above the 0.90 mark again, indicating that whales have significantly increased their inflows.
Of course, these high values of the metric do not necessarily have to be negative for the asset, as it is possible that this cohort is simply opening positions in the derivative market this time (and to some extent, this must be true in both cases, given that open interest in futures has increased in recent days).
Considering the pattern that has emerged in the previous instances, the analyst says, “I expect increased volatility in Bitcoin and anticipate a new local bottom with a decline to the range of $31,000 to $32,000, which previously acted as resistance.”
BTC Price
Bitcoin has not been able to find direction in the past few days as the coin has consolidated above $34,000. However, considering the exchange whale ratio, things could soon change for the asset.
[Insert BTC Price Chart Image]It appears that BTC has been moving sideways in recent times | Source: BTCUSD on TradingView. Featured image by Rémi Boudousquié on Unsplash.com, charts by TradingView.com, CryptoQuant.com
