Bitcoin Bullish Signal: The Exchange Whale Ratio is declining sharply

On-chain data shows that the whale ratio of Bitcoin has dropped sharply recently, a sign that could prove bullish for the crypto’s price.

Bitcoin 7-Day MA Exchange Whale Ratio has been falling rapidly lately

As one analyst pointed out in a CryptoQuant post, the metric also saw a similar drop in late 2018.

The Exchange Whale Ratio is an indicator that measures the ratio between the sum of the top ten transactions entering exchanges and the total exchange inflows.

The top ten transfers to exchanges are believed to come from whales. So this ratio tells us what portion of the total FX inflows are currently being contributed by these giant holders.

When the value of this metric is high, it means that the majority of inflows are currently made by whales. Since one of the main reasons investors deposit into exchanges is for selling purposes, such values ​​could be a sign that whales are shedding large amounts and could therefore be bearish for the price of the crypto.

On the other hand, the indicator with low values ​​suggests that whales are making a healthier contribution to the inflows and thus could be either neutral or bullish on the value of BTC.

Now here is a chart showing the trend of the 7-day moving average bitcoin to whale ratio over the past few years:

It looks like the 70-day MA of the metric has fallen sharply over the past few weeks | Source: CryptoQuant

As you can see in the chart above, just a few months ago, the Bitcoin Exchange Whale Ratio was quite high.

Since then, however, the indicator has been observing a rapid downward trend, and the ratio has now reached quite tame levels.

This means that whales have recently reduced their inflow volumes, suggesting that selling pressure from them may be exhausted.

The quant has also highlighted the trend of the purse whale ratio during the previous Bitcoin cycle on the chart. It appears to be a similar downtrend seen in late 2018 when the bottom of this bear market formed.

The analyst notes that while it’s impossible to say whether the current sharp decline in the whale ratio means it’s also bottoming this cycle, it’s likely that at least volatility will now start to cool.

BTC price

At the time of writing, Bitcoin’s price is hovering around $16.8k, down 1% over the past week.

BTC has declined over the past day | Source: BTCUSD on TradingView Featured image by Thomas Lipke on Unsplash.com, charts by TradingView.com, CryptoQuant.com