Over the past day, Bitcoin has seen a pointed return to $95,000 as on-chain data shows whales have been busy making deposits to exchanges.
Bitcoin has almost completely recovered its Christmas gains
Bitcoin renewed optimism among investors as it approached the $100,000 level during its Christmas Eve and Christmas Day rally, but last day the asset decided to crush those hopes as its price fell.
From the chart, we can see that Bitcoin has currently fallen to the $95,700 level, which is not terribly higher than the $94,100 level the asset was trading at before this surge.
The bearish price action may not be entirely unexpected given the on-chain data.
BTC whales have recently achieved massive currency inflows
As analyst Ali Martinez noted in the novel post on X exchanges have received huge Bitcoin deposits over the past week. The indicator of importance here is the “Exchange Reserve”, which tracks the total amount of BTC held in the wallets of all centralized exchanges.
When the value of this indicator increases, it means that holders are generating net inflows into these platforms. Since one of the main reasons investors operate stock markets is for selling purposes, this type of trend could have a bearish impact on the asset.
On the other hand, a decline in the ratio means that outflows outweigh inflows and the net amount of assets goes to exchange-linked portfolios. Such a trend may be a sign of accumulation among holders, which may naturally be upward due to the price.
Here’s a chart from analytics firm CryptoQuant, shared by Martinez, that shows the trend in the Bitcoin Exchange reserve over the past few weeks:
Looks like the metric has registered a pointed jump in recent days | Source: @ali_charts on X
As shown in the chart above, the Bitcoin Exchange reserve was degenerating during the price rally earlier in the month, which meant investors were buying in and helping to fuel the rally.
This didn’t happen before and during the holiday rally as the index instead saw a huge surge. In total, over the past week, investors have deposited 33,000 BTC on these platforms, worth approximately $3.15 billion at current exchange rates.
Most of these deposits arrived on Christmas Eve, which is clearly noticeable in the chart. So it appears that the whales were preparing to sell in advance, and when they thought the price would be high enough by Christmas, they pulled the trigger, causing prices to crash.
The Bitcoin Exchange reserve may be receiving particular attention right now, as any reversal in its chart would indicate that investors believe prices are low enough to be worth buying again.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
