The world’s largest cryptocurrency has been seesawing around $46,000 after multiple failures of breaking $47,000. On Wednesday, it even plunged to $43,000, breaking several moving averages.
Bitcoin is finally making some big moves and we can expect the next few days to be highly volatile.
Since late 2020, institutional investors have raced into the crypto markets and contributed to the boom of cryptos in 2021. According to the latest data of CryptoQuant, the “exchange whale ratio”, an indicator that measures the amount of top 10 transactions compared with the total inflows of exchanges, has reached 0.9.
This indicates that the top 10 transactions made up for about 90% of the total inflow in exchanges, meaning the recent inflow activities are highly aggregate.
Bitcoin whales make up a high proportion of investment is not new to the market. But when this indicator reaches such a high ratio, it could very well mean that we should prepare for some sell-offs, as investors usually move their bitcoins to exchange when they plan to sell them.
In fact, the ratio has been increasing for the past few months, coinciding with the bearish trend of bitcoin.
It could also explain the sharp sell-off we saw on Wednesday. If this indicator remains high, the market would be vulnerable to violent moves.
More painful pumps on the way?
The bitcoin market may be hit by a painful sell-off soon. On-chain data showed that a very old bitcoin address was activated a week ago and 170,031 BTC was transferred out of the address.
This address holds a total of 500 BTC and had not been activated for 10.5 years. Some speculated that the address owner was planning to take profits considering the weakness of the market recently.
The sudden move of the address raised concern among the market whether it was a sign of sell-off. Although one address selling a significant amount of BTC may not have a big impact on the market, it certainly influences the market sentiment – which has been going down and fearful lately.
Anyhow, traders are advised to monitor the market closely and prepare for volatility.
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