Bitcoin is not out of the woods yet according to this calculation

Although bitcoin is trading 25% higher than its multi-year low in June at $17,500, CryptoQuant suggested that the asset could face upcoming price declines. This is because of the Bitcoin Exchange Whale Ratio, which has entered an overheated state.

Will Bitcoin Head South Again?

The calculation follows and shows the relative size of the top 10 inflow transactions compared to the total inflows on crypto exchanges. In bull markets, as the landscape was likely to be until the end of 2021, the ratio is typically below 85%.

In contrast, it is usually well above that percentage when the bears are in control of the market, or what CryptoQuant describes – a “false bull (market) for mass dumping”.

The analysis resource’s latest report on the matter showed that the Whale’s Exchange Ratio has jumped above 0.925, which is a multi-year high. The last time it was this high was in early 2020, shortly before bitcoin cooled off by plunging below $4,000 during the COVID-19 crisis.

Since then, the metric has largely stayed below or around 0.85, which coincided with the massive bull run that resulted in BTC losing an all-time high of $69,000 last November.

It rose above the 0.85 level in Q2 2022, which turned out to be the asset’s worst quarter in a decade. Since it has remained in this danger zone, CryptoQuant concluded that BTC could be primed for more price reductions, as “there are no visible signs of cooling.”

BTC price update

As mentioned above, BTC peaked in November but has been in a state of free fall since then. The situation worsened in June this year when bitcoin fell from over $30,000 to its lowest price position since December 2020 at $17,500 in just days.

The following weeks saw some relief as the cryptocurrency reclaimed the coveted $20,000 level. Last week witnessed another price rally as this time the asset jumped to a 40-day high above $24,000.

However, it could not continue higher and fell by $2,000 on the news that Elon Musk’s Tesla had sold 85% of its BTC holdings during the second quarter. As of now, it is still trading around 22,000 dollars, but it would be interesting to follow if it will slip again as the whale exchange ratio suggests.