According to on-chain analysis, Bitcoin‘s large investors, or “whales,” have exhibited distinct patterns in their exchange transactions compared to the previous market cycle. This could be due to several reasons.
Bitcoin Whales Are Showing Different Behavior In Exchange Inflows This Time
According to an analysis by a crypto expert in a recent CryptoQuant article, the behavior of bitcoin’s large investors (whales) has differed from past market cycles.
In this context, the important metric to focus on is “exchange inflow,” which represents the overall sum of Bitcoin moving into wallets linked to centralized exchanges. Particularly noteworthy in the current conversation are derivative platforms.
When the value of this metric is substantial, it indicates that investors are making significant deposits into these derivative exchanges. This pattern often signifies a strong interest in the services these exchanges offer, implying a high market demand.
Typically, significant jumps in the indicator are linked to the actions of whales due to their immense size being the only factor capable of producing such substantial changes.
When the metric has a small value, it indicates that whales aren’t contributing much to these platforms in terms of deposits. This could mean that they are hesitant or unwilling to engage with derivatives.
Here’s a chart the quant has provided, displaying Bitcoin inflows into derivative exchanges:
In the given chart, the marker follows a specific rule regarding the source of inflows. It records inflows solely from whales who have held their assets for a minimum of one month and a maximum of three months prior to the current observation.
New investors in the market, but not newly minted ones (minimum holding period of one month), are being referred to here. Narrowing down the holding duration also eliminates information from frequent traders with a penchant for making multiple trades within a short span.
In the given chart, the expert point out that large investments by “whale” investors into derivatives exchanges tend to occur around significant peaks and troughs in the cryptocurrency market, during periods of intense speculation.
Surprisingly, the cryptocurrency hasn’t seen significant influx surges this year despite breaking through its previous record high (ATH).
An alternative interpretation could be that whales might not feel compelled to take significant actions at this time. A plausible cause for this could be the availability of spot exchange-traded funds (ETFs).
Spot Bitcoin ETFs serve as intermediaries, allowing investors to own a share of Bitcoin without actually handling the cryptocurrency themselves. This approach mimics traditional investment methods.
ETFs (Exchange-Traded Funds) have led to a large inflow of interest in the asset and have established themselves as essential market players. Conceivably, traditional cryptocurrency trading platforms may lose some significance for this asset with the advent of ETFs.
The reason the past Bitcoin pattern no longer seems to apply in the present cycle could be this.
BTC Price
At the time of writing, Bitcoin is trading at around $66,100, down more than 8% over the past week.
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2024-04-16 04:16