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Quick Bitcoin Price Recovery Looks in Doubt as Whales Move Coins Onto Exchanges
"Whales are transferring bitcoin to exchanges. The cryptocurrency may trade in a sideways-to-negative manner," said one analyst.
Updated Sep 14, 2021, 10:35 a.m. Published Nov 27, 2020, 12:09 p.m.
Bitcoin may have a tough time charting a V-shaped recovery to recent highs in the short term, with on-chain activity showing increased selling pressure in the market.
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Blockchain analytics firm CryptoQuant's exchange inflow indicator – which measures the 144-block (roughly 24-hour) average of mean bitcoin deposits across major cryptocurrency exchanges – has risen to 2.5 bitcoin, the highest level since March 20.
In other words, the average size of inward-bound transactions to trading platforms has risen to eight-month highs.
"The data shows whales [large traders] are transferring their coins to exchanges," CryptoQuant CEO Ki-Young Ju told CoinDesk. "The cryptocurrency usually trades in a sideways-to-negative manner when whales become active on exchanges."
Bitcoin is trading near $16,820 at press time, representing a 2% drop on a 24-hour basis. The cryptocurrency saw rejection above $17,400 early on Friday.
The possibility of prices falling to or below Thursday's low of $16,327 cannot be ruled out with average inflows now moving above two bitcoin – into CryptoQuant's "danger zone."
A reading above 2.00 on the indicator has consistently paved the way for notable price drops this year. The indicator rose above that level at least a week before the 40% drop seen on March 12.
Similarly, the sharp sell-off seen in November 2018 was preceded by a sharp rise in the metric.
Technical chart studies indicate low odds of an immediate bounce to levels above $19,000.
Thursday's price drop was backed by the highest sell volume (red bar) since June 1. As such, the pullback looks to have legs. Short-term momentum indicators such as the five- and 10-day moving averages are now looking south.
Also read: 3 Reasons Bitcoin Crashed by $3,000 – And Why It’s Still Bullish
Support is seen at $15,798 – the 38.2% Fibonacci retracement of the rally from September low to November high.
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- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
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