Bitcoin “Exchange Whale Ratio” Is Rising: Why This Could Be Alarming

Bitcoinist
Updated Jun 18, 2024 01:02
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On-chain data shows the Bitcoin Exchange Whale Ratio has been on the up recently, a sign that could prove to be bearish for the asset’s price.


60-Day MA Bitcoin Exchange Whale Ratio Has Been Rapidly Climbing Recently


As pointed out by an analyst in a CryptoQuant Quicktake post, the Exchange Whale Ratio has seen sharp growth recently. The “Exchange Whale Ratio” is an indicator that keeps track of the ratio between the sum of the top 10 transfers going to exchanges and the total exchange inflow.


The ten largest exchange inflows can be assumed to be coming from the whales, who are entities that carry the largest holdings on the network and thus, also the most influence in the market.


The Exchange Whale Ratio basically tells us about how the exchange inflow activity of these humongous investors compares against that of the entire Bitcoin market.


When the value of this metric is high, it means the top 10 exchange inflows are making up for a significant part of the market deposits. Generally, investors make deposits whenever they want to make use of one of the services that these platforms provide, which can include selling.


As such, the indicator having a high value could imply these large holders are contributing a high amount of selling pressure right now. Naturally, this kind of trend can be bearish for the asset.


On the other hand, the ratio being low suggests the whales are making up for a relatively healthy part of the total exchange inflows, which can have a bullish effect on the price.


Now, here is a chart that shows the trend in the 60-day moving average (MA) of the Bitcoin Exchange Whale Ratio over the past few years:

Bitcoin Exchange Whale Ratio


As is visible in the above graph, the 60-day MA Bitcoin Exchange Whale Ratio has been climbing up on a steep upwards trajectory during the past few months. This would suggest that the whales have been increasing their share of the exchange inflows recently.


The rise in the indicator has come as the price of the cryptocurrency has enjoyed growth and has set a new all-time high (ATH). In the chart, the quant has highlighted what happened during the last few times when the metric witnessed a similar rally.


It would appear that the price of the cryptocurrency has generally seen a steep drawdown whenever the Exchange Whale Ratio has grown to high values. So far, BTC has yet to see a similar decline, although its price has lost its bullish momentum and has been moving sideways recently.


“My guess is that this hasn’t happened because of the huge demand for spot ETFs,” notes the analyst. It now remains to be seen how long the demand will be able to absorb this increasing selling pressure from the whales and if the price would succumb in a similar fashion as in the past when buying does dry up.


BTC Price


At the time of writing, Bitcoin is floating around $65,600, down more than 5% over the last seven days.

Bitcoin Price Chart

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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