On-chain data shows that the Bitcoin exchange whale ratio has recently increased, something that could lead to a further fall in the value of the asset.
Bitcoin Exchange Whale Ratio has been rising sharply lately
As noted by an analyst in a CryptoQuant afterthe exchange whale ratio is currently at its highest level since September 2019. The “exchange whale ratio” is an indicator that measures the ratio between the sum of the top 10 inflows to exchanges and the total exchange inflows.
An “exchange inflow” is any movement of Bitcoin into the wallets of centralized exchanges from addresses outside such platforms (such as self-custodial wallets).
The top 10 inflows here refer to the 10 largest inflows going into these platforms. In general, these largest transfers are from the whales, so the exchange whale ratio can tell us how the whale inflow activity currently compares to that of the entire market (the total inflow).
When this indicator has a high value, it means that these giant holders are currently a large part of the total inflow. Since one of the main reasons investors move their coins to exchanges is for sales-related purposes, this kind of trend could be a sign that whales are selling right now.
On the other hand, low values of the statistic imply that this cohort is not generating too much inflow compared to the rest of the market. Such a trend can be neutral or bullish for the price of the cryptocurrency depending on other market conditions.
Now, here is a chart that shows the trend in the Bitcoin exchange whale rate over the past few years:
Looks like the value of the metric has been pretty high in recent days | Source: CryptoQuant
As shown in the chart above, the Bitcoin exchange whale ratio has recently seen a pretty big spike. This suggests that whales currently account for a fairly large portion of the total exchange inflow.
The metric has crossed the 0.8 mark in this peak, implying that over 80% of inflows are currently coming from these giant investors. This ratio level has not been seen in the market since 2019.
This earlier peak of similar magnitude occurred as the price was declining from the April 2019 rally, and soon after, Bitcoin recorded an extension of its uptake.
An even larger peak in the ratio was also observed earlier in the year, around the peak of the aforementioned April 2019 rally. The timing of these two peaks may indicate that it was whale dumping that affected the market and caused caused the price to drop.
If these past instances of whale influx activity of similar levels are anything to go by, Bitcoin price could take a bearish decline in the near term due to the current potential selling pressure from this cohort.
The withdrawal may have already begun as the price of the cryptocurrency has dipped below $28,000 today.
BTC price
At the time of writing, Bitcoin is trading around $27,900, down 2% over the past week.
BTC has plunged in the past day | Source: BTCUSD on TradingView
Featured image by Thomas Lipke on Unsplash.com, charts from TradingView.com, CryptoQuant.com