On-chain data shows that the Bitcoin exchange whale ratio has fallen sharply recently, a sign that could prove bullish for the price of the crypto.
Bitcoin 7-day MA Exchange Whale Ratio has been falling rapidly lately
As noted by an analyst in a CryptoQuant afterthe measure also saw a similar decline at the end of 2018.
The “exchange whale ratio” is an indicator that measures the ratio between the sum of the top ten transactions going to exchanges and the total inflow from exchanges.
The ten largest transfers to exchanges are believed to come from the whales. So, this ratio tells us what portion of the total alternating current is currently being contributed by these giant holders.
When the value of this statistic is high, it means that the bulk of the inflow is currently made up of whales. Since one of the main reasons investors deposit on exchanges is for selling purposes, such values could be a sign that whales are dumping large sums, and thus could be bearish for the cryptocurrency’s price.
On the other hand, the low reading indicator suggests that whales are a healthier contributor to inflows and thus could be neutral or bullish to the value of BTC.
Now, here is a chart showing the trend in the 7-day moving average Bitcoin exchange whale rate over the past few years:
Looks like the 70-day MA value of the metric has been sharply falling off in recent weeks | Source: CryptoQuant
As you can see in the chart above, the Bitcoin exchange whale ratio was quite high just a few months ago.
Since then, however, the indicator has seen a rapid downward trend and the ratio has now reached fairly tame values.
This means that whales have been reducing their inflow volumes lately, suggesting that the selling pressure from them may be exhausting.
The quant has also highlighted the trend in the exchange whale ratio over the previous Bitcoin cycle on the chart. It appears to be a similar downtrend to now, in late 2018, when the bottom of that bear market was formed.
The analyst notes that while it’s impossible to say whether the current sharp decline in the whale rate will bottom out for this cycle as well, it’s likely that volatility is at least starting to cool now.
BTC price
At the moment of writing, The price of Bitcoin floating around $16.8k, down 1% over the past week.
BTC has declined during the past day | Source: BTCUSD on TradingView
Featured image from Thomas Lipke on Unsplash.com, charts from TradingView.com, CryptoQuant.com