Quick Bitcoin Price Recovery Looks in Doubt as Whales Move Coins Onto Exchanges

Quick Bitcoin Price Recovery Looks in Doubt as Whales Move Coins Onto Exchanges
Bitcoin prices over the last week
(CoinDesk 20)

Bitcoin may have a tough time charting a V-shaped recovery to recent highs in the short term, with on-chain activity showing increased selling pressure in the market.

Blockchain analytics firm exchange inflow indicator – which measures the 144-block (roughly 24-hour) average of mean bitcoin deposits across major cryptocurrency exchanges – has risen to 2.5 bitcoin, the highest level since March 20.

In other words, the average size of inward-bound transactions to trading platforms has risen to eight-month highs.

“The data shows whales [large traders] are transferring their coins to exchanges,” CryptoQuant CEO Ki-Young Ju told CoinDesk. “The cryptocurrency usually trades in a sideways-to-negative manner when whales become active on exchanges.”

Bitcoin is trading near $16,820 at press time, representing a 2% drop on a 24-hour basis. The cryptocurrency saw rejection above $17,400 early on Friday.

The possibility of prices falling to or below Thursday’s low of $16,327 cannot be ruled out with average inflows now moving above 2 bitcoin – into CryptoQuant’s “danger zone.”

A reading above 2.00 on the indicator has consistently paved the way for notable price drops this year. The indicator rose above that level at least a week before the 40% drop seen on March 12.

Similarly, the sharp sell-off seen in November 2018 was preceded by a sharp rise in the metric.

Technical chart studies indicate low odds of an immediate bounce to levels above $19,000.

Thursday’s price drop was backed by the highest sell volume (red bar) since June 1. As such, the pullback looks to have legs. Short-term momentum indicators such as the 5- and 10-day moving averages are now looking south.

Support is seen at $15,798 – the 38.2% Fibonacci retracement of the rally from September low to November high.

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