Bitcoin Whale Ratio Rises as Leverage Remains High
On-chain data shows that the Bitcoin whale ratio has increased recently as market leverage has remained around an all-time high.
Bitcoin Whale and leverage ratios are around ATHs right now
As one analyst pointed out in an article on CryptoQuant, BTC investors are currently involved in high-risk trading in the futures market.
The “exchange whale ratio” is an indicator that measures the ratio of the sum of the entries of the top ten exchanges to the total exchange entries.
Since the ten largest transfers to exchanges are assumed to come from whales, this metric 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 flows at this time.
Now, here is a graph that shows 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 chart above, the release quant marked relevant trending periods for the Bitcoin exchange whale ratio.
It seems that usually whenever the indicator made a high and then started falling, the price also took a hit.
From the chart, it is evident that the metric has been increasing over the past few months and is now floating around record highs.
The “estimated leverage ratio” data is also displayed. This indicator tells us the amount of leverage 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 right now.
High leverage in the market has historically resulted in a more volatile BTC price. Under these conditions, if the whales ratio also starts to decline and the same trend as in the past also continues, then things could turn bearish for the crypto very quickly.
At the time of writing, the price of Bitcoin is hovering around $19.5,000, up 2% in the past seven days. Over the past month, the crypto has gained 1% in value.
The chart below shows the price trend of the coin over the past 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