Bitcoin Whales Signal Potential Selling Pressure Amid Fluctuating Market Sentiment

By Aaron Feuerstein May 07, 2024 In Bitcoin, Stock Market
Whales shear hamsters in the crypto market vector illustration. Pamp and damp. Investing and trading on the stock exchange. Japanese candlesticks represent the change in the exchange rate. The rich get richer and the poor get poorer.
  • Bitcoin recovered to above US$63K after a significant drop, with current market conditions described as the most volatile since November 2022.
  • The Exchange Whale Ratio has spiked, indicating that whales may be preparing to sell, contributing to the market’s bearish trends.
  • The STH-MVRV ratio is below one, suggesting reduced selling pressure and potential market recovery, supported by positive signals from the Bitcoin Fundamental Index.

Amid neutral market sentiment Bitcoin has used the past weekend to climb back above US$63K (AU$95K) after falling as low as US$56,820 (AU$85,795) last week. 

But according to a Bitfinex report, traders are still testing the waters for the price of BTC following the recent halving and the reduction in mining rewards as well as macro headwinds and inflation worries.

The report, shared with Crypto News Australia, highlights that the recent choppy market conditions are the most volatile since November 2022. The current correction (23%) was thus larger than the September 2023 pull-back (21.7%).

Related: Visa Stirs Controversy with Claims that Stablecoin Transactions ‘Inorganic’


Crucial Metric Indicates Potential Whale Sell-Off

Bitcoin’s market dynamics have been influenced by significant selling activities, especially from Bitcoin whales and short-term holders. The Exchange Whale Ratio, which tracks large deposits to exchanges, has spiked, indicating whales might be preparing to sell, which contributes to recent bearish trends, the report states.

Bitfinex writes that this is reinforced by Bitcoin’s drop from its all-time high in March 2024 to below its previous cycle high of US$69K (AU$104.4K). They add that although whales play a crucial role, the most aggressive selling pressures come from short-term holders who have owned Bitcoin for less than 155 days, with their behaviour intensifying the selling momentum.

Exchange Whale Ratio, source: CryptoQuant/ Bitfinex

This group’s actions, particularly those holding Bitcoin from one week to one month, have significantly impacted the spot price due to their heightened price sensitivity and likelihood to sell during market downturns. However, the analysts note that the trend may stabilise if the whale activity decreases, suggesting a temporary halt in distribution from long-term holders and whales.

MVRV Indicates Mixed Signals Across Holder Types

Furthermore, the Market Value to Realized Value (MVRV) ratio for Bitcoin holders within a one-week to one-month timeframe suggests the likelihood of upcoming sell-offs. Currently, this ratio is close to their cost basis, suggesting a local bottom. However, if Bitcoin breaks below this level, it may trigger widespread selling, exacerbating the bearish trend, Bitfinex added.

BTC Market Value to Realised Value, source: Glassnode/ Bitfinex

The Short-Term Holder MVRV (STH-MVRV) ratio currently stands at 0.96, typically indicating a nearing market recovery as it dips below one. This suggests that selling pressure from short-term holders is diminishing, hinting at possible seller exhaustion.

Additionally, the Bitcoin Fundamental Index (BFI), which evaluates Bitcoin’s network health through transaction volume and wallet activity, signals a potential upward trend.

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The index’s current position shows reduced selling pressure and an increase in network activity beyond past market bottoms, pointing to likely positive movements, the analysts at Bitfinex concluded.

Aaron Feuerstein

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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