Although bitcoin is trading 25% higher than its multi-year low hit in June at $17,500, CryptoQuant suggested that the asset could face further price declines. This is due to the Bitcoin exchange whale ratio, which has entered a state of overheating.

Will Bitcoin Head South Again?

The metric tracks and shows the relative size of the top 10 inbound transactions compared to the total inflows on crypto exchanges. In bull markets, as was certainly the case through the end of 2021, the ratio is often below 85%.

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

The analytics resource’s latest report on the matter showed that the whales’ ratio of trade 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 as it fell below $4,000 during the COVID-19 crisis.

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

It spiked 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 poised for more price pullbacks as there are “no apparent signs of cooling”.

Bitcoin whale exchange ratio. Source: CryptoQuant

BTC price update

As mentioned above, BTC peaked in November, but has been in freefall ever since. The situation worsened in June this year when Bitcoin crashed from over $30,000 to its lowest price position since December 2020 of $17,500 in just a few days.

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

However, it was unable to continue to the upside and fell $2,000 on 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, but it would be intriguing to know if it will drop again as the Whales Exchange Ratio suggests.

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This post Bitcoin is not out of the woods yet according to this metric

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