Is Bitcoin to head south again? According to the Whale Exchange Ratio, BTC isn’t out of the woods quite yet.
While BTC trading prices are about 25% higher than the multi-year dip of $17,500 seen in June, CryptoQuant believes there could be additional slumps in the near future. This stems from the Bitcoin Exchange Whale Ratio, which is now in an overheated state.
What is The Bitcoin Exchange Whale Ratio?
This metric follows the relative size of the top inflow transactions against the total inflows across crypto exchanges. When in a bull market, much like the one before the end of 2021, this ratio tends to sit below 85%.
In a bear market, however, the ratio soars well above that marker. CryptoQuant describes this as a “fake bull market for mass-dumping.” According to their latest report on the issue, the ratio soared above 0.925, which is a peak well over the past couple of years. In fact, the last time the percentage was this high was early 2020.
That’s shortly before BTC cooled off a plummet below $4,000 during the early days of the COVID-19 pandemic. Since that time, the metric sat steadily at or below 85%. This coincided with the bull run that brought BTC to its all-time high of almost $70,000 in November 2021.
In the second quarter of 2022, the metric shot well above the standard marker. As such, BTC saw its worst quarter in roughly a decade.
Because the metric remains in this position, the analytics firm believes there are more retracements in the future because “there are no apparent signs of cooling down.”
BTC Price Update as We Near the End of July
While we all know that BTC peaked in November 2021, the asset has plummeted ever since. In June 2022, the situation only grew worse as the value dropped from above $30,000 to $17,500 in a matter of days, bringing BTC to its lowest price since December 2020.
Over the past few weeks, there’s been some relief as BTC tapped the $20,000 level again. Moreover, last week brought a price surge as Bitcoin hit a 4–day-high of $24,000.
Unfortunately, it dipped by roughly $2,000 following the news that Tesla sold the majority of its Bitcoin holdings. Now, the asset continues to hover around $22,000.
Still, we’re all curious to see whether the Bitcoin Exchange Whale Ratio is truly a signal of future slips.