Although bitcoin trades 25% higher than its multi-year bottom tapped in June at $17,500, CryptoQuant suggested that the asset could face upcoming price drops. This is because of the Bitcoin Exchange Whale Ratio, which has gone into an overheated state.
The metric follows and displays the relative size of the top 10 inflow transactions compared to the total inflows on crypto exchanges. In bull markets, as the landscape certainly was until the end of 2021, the ratio is typically below 85%.
In contrast, though, it’s usually well above that percentage when the bears are in control of the market, or there’s what CryptoQuant describes – a “fake bull (market) for a mass-dumping.”
The analytics resource’s latest report on the matter showed that the Whales Exchange Ratio has jumped above 0.925, which is a multi-year peak. The last time it was this high was back in early 2020, shortly before bitcoin cooled off by plummeting 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 resulted in BTC tapping an all-time high of $69,000 last November.
It spiked above the 0.85 level in Q2 2022, which turned out to be the asset’s worst quarter in a decade. Since it has remained in this danger zone, CryptoQuant concluded that BTC could be primed for more price retracements as “there are no apparent signs of cooling down.”
Bitcoin Whales Exchange Ratio. Source: CryptoQuant
As mentioned above, BTC peaked in November but has been in a state of freefall ever since. The situation worsened in June this year when bitcoin plummeted from over $30,000 to its lowest price position since December 2020 of $17,500 in just days.
The following several weeks saw some relief as the cryptocurrency reclaimed the coveted $20,000 level. Last week witnessed another price surge as this time, the asset jumped to a 40-day high of over $24,000.
However, it couldn’t continue upwards and dipped by $2,000 on news that Elon Musk’s Tesla had sold 85% of its BTC holdings during Q2. As of now, it still trades around $22,000, but it would be intriguing to follow whether it will slip again as the Whales Exchange Ratio suggests.
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