Metric analysis

Bitcoin is not out of the woods yet according to this metric

Although bitcoin is trading 25% higher than its multi-year low reached in June at $17,500, CryptoQuant suggested that the asset could face further price declines ahead. This is due to the Bitcoin Exchange Whale Ratio, which entered an overheated state.

Bitcoin heading south again?

The metric tracks and displays the relative size of the top 10 inbound transactions compared to total inflows on crypto exchanges. In bull markets, as the landscape certainly was through the end of 2021, the ratio is typically below 85%.

In contrast, however, it is usually well above this percentage when the bears are in control of the market, or there is what CryptoQuant describes – a “false bull (market) for mass dumping”.

The Latest Analytics Resource report on this showed that the whale exchange ratio jumped above 0.925, which is a multi-year peak. The last time it was this high was in early 2020, shortly before bitcoin cooled off to below $4,000 during the COVID-19 crisis.

Since then, the metric has remained mostly below or around 0.85, which coincided with the massive bull run that took BTC to an all-time high of $69,000 last November.

It broke above the 0.85 level in the second quarter of 2022, which turned out to be the asset’s worst quarter in a decade. Since it remained in this danger zone, CryptoQuant concluded that BTC might be primed for more price retracements as “there are no apparent signs of cooling.”

Bitcoin whale exchange ratio. Source: CryptoQuant

BTC Price Update

As mentioned above, BTC peaked in November, but has since plummeted. The situation escalated in June this year when bitcoin fell from over $30,000 to its lowest price position since December 2020 of $17,500 in just a few days.

The following weeks saw some relief as the cryptocurrency recovered to the coveted $20,000 level. Last week witnessed another surge in price, this time the asset hit a 40-day high of over $24,000.

However, it could not continue to rise and fell $2,000 after learning that Elon Musk’s Tesla had sold 85% of its BTC holdings during the second quarter. Right now, it is still trading around $22,000, but it would be interesting to know if it will slide again as the whales trading report suggests.

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