Bitcoin Bearish Signal: Exchange Whale Ratio Spikes
On-chain data shows the Bitcoin exchange whale ratio has observed a sharp spike recently, a sign that could be bearish for the asset’s price.
Bitcoin Exchange Whale Ratio Has Been Elevated Recently
As pointed out by an analyst in a CryptoQuant post, whales may be making deposits to sell currently. 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.
The 10 largest transactions to exchanges can be assumed to be coming from the whales, so this ratio’s value tells us what percentage of the total transfers towards these platforms is being contributed by the whales.
When the value of this indicator is high, it means a large percentage of the exchange inflows is coming from these humongous holders currently. Such a trend can have bearish implications for the price as it can be a sign of mass selling from the whales.
On the other hand, low values of the metric suggest these investors are making up for a healthier portion of the exchange inflows. This kind of trend can either be bullish or neutral for the price, depending on some other factors.
Now, here is a chart that shows the trend in the Bitcoin exchange whale ratio over the last couple of years:
Looks like the value of the metric has been quite high recently | Source: CryptoQuant
The version of the Bitcoin exchange whale ratio used here is specifically for the spot platforms, as spot exchanges are what investors generally use for selling-related activities.
As shown in the above graph, the indicator’s value has sharply risen in the last few days and is now around a value of 0.64. This means that 64% of the total exchange inflows are coming from the whales alone currently.
In the chart, the quant has also highlighted the points where the metric has previously shown such spikes, as well as how the price of the cryptocurrency has reacted to occurrences like these.
It seems like a lot of these instances proved to be bearish for the price of the cryptocurrency as the asset hit a peak when they took place. This means that the selling pressure from the whales was behind the decline during these occurrences.
There were other instances, however, that didn’t end up having any noticeable effects on the price. Some of these took place following big moves in the asset’s value, so they may have been caused by exchanges getting in more liquidity into their platforms (since purchases from exchanges will also show up as extremely large inflows in on-chain data).
This implies that the latest high exchange whale ratio doesn’t necessarily have to be bearish for Bitcoin. However, considering that these spikes in whale inflows have come while the price has been surging, it’s possible that these deposits have been made for taking profits at the current high prices. If this is indeed the case, then BTC could face a drawdown in the near term.
At the time of writing, Bitcoin is trading around $29,900, up 1% in the last week.
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