Bitcoin Whale Ratio Rises as Leverage Remains High
On-chain data shows that the Bitcoin whale ratio has increased recently, as leverage in the market has remained around an all-time high.
Both Bitcoin Whale and Leverage Ratios are around ATHs right now
As pointed out by an analyst in a CryptoQuant post, BTC investors are currently involved in high-risk trading in the futures market.
The “exchange whale ratio” is an indicator that measures the ratio between the sum of the ten best inflows to the exchanges, and the total exchange inflows.
Since the top ten transfers to exchanges are believed to be from the whales, this calculation tells us whether whales are active in the market right now or not.
When the value of the ratio is high, it means that the whales are making a large contribution to the exchange inflow at the moment.
Now, here is a chart showing the trend of the Bitcoin whale ratio over the past few years:
Looks like the value of the metric has been elevated in recent days | Source: CryptoQuant
As you can see in the graph above, the quant from the post has marked the relevant trend periods for the Bitcoin exchange whale ratio.
It seems that usually when the indicator has reached a high and then started to decline, the price has taken a big hit.
From the chart, it is clear that the calculation has risen over the past few months, and is now hovering around all-time highs.
The “estimated leverage ratio” data is also shown. This indicator tells us how much leverage is used by the average trader in the futures market.
The Bitcoin leverage ratio has risen very sharply recently and is also at a new ATH now, suggesting that investors are taking a lot of risk at the moment.
High leverage in the market has historically resulted in a more volatile BTC price. Under these conditions, if the whale ratio also starts to decline and the same trend as previously follows now as well, things can turn bearish very quickly for the crypto.
BTC price
At the time of writing, Bitcoin’s price is hovering around $19.5k, up 2% in the last seven days. Over the past month, the crypto has increased 1% in value.
The chart below shows the trend in the price of the coin over the last five days.
The value of the crypto seems to have been trending sideways since the plunge a few days back | Source: BTCUSD on TradingView
Featured image from Peg Lemkuil on Unsplash.com, charts from TradingView.com, CryptoQuant.com
