Bitcoin’s price drop ’shouldn’t happen‘ while whales are out of exchange

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Unfoldings in the BitMEX case do not indicate massive sales, although BTC/USD approaches $11,500, show CryptoQuant data.

Bitcoin price drop ’shouldn’t happen‘ while whales are out of exchangesMARKETS

A potential Bitcoin (BTC) liquidation followed by a price drop „should not happen“, according to the CEO of a well-known analysis tool.

In a tweet on 12 October, Ki Young Ju, CEO of CryptoQuant, noted that the flow of entries to exchanges remains low despite BTC’s price gains.

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Ki: Flows of exchanges „go on in the safe zone
Ki highlighted CryptoQuant’s average exchange rate inflow metric, which remains comfortably within the low risk area, suggesting a low chance of liquidation.

The average exchange inflow measures how much Bitcoin is entering the exchanges, taking into account that the currency is used for sales or trading activities. By extension, it gives an idea of the activity of the whales – large volume hodlers planning to dispose of the BTC.

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„Dumping of $BTC will not happen,“ Ki commented.

„The average entry of all exchanges usually indicates how many whales are active in the exchanges. Above 2 BTC is the danger zone, and we are still in the safe zone. ”

Therefore, the rise in the BTC/USD pair to close to $11,500 this week has not increased the temptation for investors to sell.

Bitcoin mean inflows vs. BTC/USD 1-month chart

Average Bitcoin flows vs. 1-month BTC / USD chart. Source: Ki Young Ju/ Twitter

The lack of activity contrasts sharply with the beginning of this year. On March 9, a week before the coronavirus caused a drop in the price of crossed assets, the exchange entries passed the „danger zone“ of 2 BTC. Days later, around March 14, entries peaked at almost 5 BTC. Bitcoin subsequently dropped to $3,600.

Sales pressure at BitMEX?
CryptoQuant also previously highlighted the flows of miners contributing to the Bitcoin price action. Last month, it was an increase in flows from mining pools, also presumably destined for sale, that followed a 3% drop in BTC/USD.

In October, the outlook for withdrawals was affected by BitMEX, as the derivatives giant is currently under investigation by US tax authorities. BitMEX outflows totalled 50,000 BTC on October 2 alone, CryptoQuant data show.

BitMEX inflows and outflows chart

 

The figures from BitMEX, Cointelegraph and Digital Assets Data confirm that it does not hold as much market share for Bitcoin futures as it did in the past.

Bitcoin futures volume exchange comparison 1-month chart

1 month chart for comparison of Bitcoin futures volume. Source: Cointelegraph/ Digital Assets Data

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As several analysts have noted, Bitcoin therefore largely weathered the storm caused by the platform problems, beating resistance levels by US$11,000.

This resilience encouraged Bitcoin’s bullish case, as published by the Cointelegraph, with an increasing number of market participants confident of additional gains preceding further losses.