Bitcoin Bullish Signal: Exchange Whale Ratio Plunges

Bitcoin Bullish Signal: Exchange Whale Ratio Plunges

Time Stamp: June 26, 2023 7:30 AM

On-chain data shows that the Bitcoin exchange whale ratio has taken a plunge recently. Here’s why this may be bullish for the asset’s price.

Bitcoin Exchange Whale Ratio Has Registered A Sharp Decline Recently

As pointed out by an analyst in a CryptoQuant post, the selling pressure in the market may be diminishing right now. The “exchange whale ratio” is an indicator that measures the ratio between the sum of the top ten Bitcoin transactions to exchanges and the total exchange inflow.

Generally, the 10 largest transactions to exchanges are coming from whale entities, so this metric can tell us how the inflows of these humongous holders compare with that of the entire market.

When the value of this ratio is high, it means that the whales are making up a large part of the total inflows currently. As one of the main reasons why investors deposit to exchanges is for selling-related purposes, this kind of trend can be a sign that this cohort may be taking part in mass dumping right now.

On the other hand, low values of the indicator imply the whales are contributing a relatively healthy portion toward the inflows at the moment. Since these large investors aren’t selling significantly more than the rest of the market during such periods, the price of the cryptocurrency can feel a bullish effect.

Now, here is a chart that shows the trend in the 72-hour simple moving average (SMA) Bitcoin exchange whale ratio over the past several months:

Bitcoin Exchange Whale Ratio

Looks like the 72-hour SMA value of the metric has taken a deep hit in recent days | Source: CryptoQuant

As displayed in the above graph, the 72-hour SMA Bitcoin exchange whale ratio has plummeted recently, implying that the whale deposits have dropped relative to the rest of the market.

Before this plunge, the indicator had been in an overall uptrend since March, suggesting that these humongous investors were possibly slowly ramping up their selling.

During the recent period when the asset’s price was struggling, the metric had surged to around 0.88, meaning that around 88% of the total exchange inflows were coming from this cohort alone.

Following the latest rapid decline, however, the 72-hour SMA Bitcoin exchange whale ratio has dropped to around 0.80. Interestingly, this drawdown in the indicator has come while the coin has seen a sharp rally that has now taken the price above the $30,000 level.

Usually, whales may ramp up their selling a little during such periods, as at least some of these large investors might be enticed by the profit-taking opportunity. Since that doesn’t seem to have occurred yet, it may be a sign that these holders believe that there is more to come for this rally.

From the chart, it’s visible that the indicator also saw a sharp plunge following the FTX collapse, which allowed the cryptocurrency to bottom out and eventually build up toward the rally.

The current relatively low selling pressure from the whales may potentially allow the price of the cryptocurrency to grow in a similar fashion as well (which would only be, of course, given that the metric continues to be at these low values in the near future).

BTC Price

At the time of writing, Bitcoin is trading around $30,400, up 15% in the last week.

Bitcoin Price Chart

BTC has stagnated since the sharp climb | Source: BTCUSD on TradingView

Featured image from iStock.com, charts from TradingView.com, CryptoQuant.com

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