Network data suggests that Bitcoin whales have shown different behavior towards exchange flows since the last cycle. Here’s why this might be so.
Bitcoin whales are showing different behavior on exchange entries this time
As one analyst explained in a CryptoQuant Quicktake publishBTC whale movements this time were different compared to the previous cycle.
The indicator of interest here is the “exchange entry”, which tracks the total amount of Bitcoin being transferred to wallets attached to all centralized exchanges. In the context of the current discussion, derivative platforms are specifically of interest.
When the value of this metric is high, it means that investors are depositing large amounts on these exchanges. Such a trend typically suggests a high demand for the services that these derivatives exchanges provide.
Generally, extraordinary spikes in the indicator are associated with whale movements, given that only these gigantic holders can cause such huge changes.
On the other hand, when the metric has a low value, it suggests that whales are not depositing anything significant on these platforms, a possible sign that they do not want to take risks on the derivatives side.
Now, here is the chart shared by quant, which shows the inflow data from Bitcoin exchanges to derivatives exchanges:
The value of the metric seems to have been relatively low in recent days | Source: CryptoQuant
The indicator in the chart above also has another condition associated with it: it only tracks flows coming from whales that were stranded for at least 1 month and a maximum of 3 months.
These would be whales new to the market, but not so new that they have just purchased (those with a waiting time of less than 1 month). Restricting this time frame also excludes data from traders who, on average, make a large amount of moves in short time frames.
As the analyst highlighted in the chart, whales from this group often make large inflows to derivatives platforms around notable cryptocurrency tops and bottoms, when speculation is at its peak.
Interestingly, however, the cryptocurrency has not witnessed such large inflow spikes this year, although the asset has surpassed its previous all-time high (ATH).
One explanation could be that the whales are not interested in making any real movements at this time. However, a more likely reason may be that spot exchange-traded funds (ETFs) exists now.
Spot ETFs hold Bitcoin on behalf of their clients and allow them to gain indirect exposure to cryptocurrency in a way familiar to conventional investors.
ETFs brought significant demand for the asset and quickly became an important part of the market. It is possible that, with this new investment vehicle, the usual cryptocurrency exchanges no longer have the same relevance for the asset.
This could be why the pattern held during the previous BTC cycle has seemingly disappeared from the current one.
BTC Price
At the time of writing, Bitcoin is trading around $66,100, down more than 8% over the past week.
Looks like the price of the asset has overall moved sideways recently | Source: BTCUSD on TradingView
Featured image by Bart from Unsplash.com, CryptoQuant.com, chart from TradingView.com
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