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Bitcoin supporters and investors are (naturally) calling for a supercycle, with predictions of the world’s largest cryptocurrency by market cap reaching as high as $ 1 million in some circles.
But this party could be ruined if a technical indicator had to be taken into account. The $ BTC Exchange Whale (72h MA) report has reached 90%, warned Ki-Young Ju, the founder of crypto analysis tools CryptoQuant, in a tweet today.
He added: This is the highest since February 2020 before the massive dumping. Don’t put on too much weight on your longs. Be careful.
The $ BTC (72h MA) whale exchange rate has reached 90%.
This is the highest since February 2020 before the massive dumping. Don’t put on too much weight on your longs. Be careful.
Graphic https://t.co/t3orEMC7sC pic.twitter.com/vynh5ArB9I
– Ki Young Ju (@ki_young_ju) August 10, 2021
What is the whale dump tool?
According to CryptoQuant, the so-called Whale Dumping is a measure of the deposits of some of the largest Bitcoin holders colloquially known as whales in financial circles.
These holders are generally secret about their transactions and their identity is often unknown, but tracking whale wallets helps provide insight into what large holders of Bitcoin and other cryptocurrencies are doing and how their transactions might have a impact. impact on the market.
Two indicators are used by CryptoQuant to check how whales empty their coins: 1. An All Exchanges Inflow Mean (24h MA) tool which calculates the average amount of Bitcoin deposits at all crypto exchanges, and 2. an Exchange Whale Ratio tool, which calculates the first 10 transactions from entries to total entries.
The latter indicator is said to show a ratio above 85% when prices skyrocket during a fake or precede a dump. In the bull market, it often remains below 85%. In contrast, in the bearish or false bull market for massive dumping, it typically stays above 85%, explains the CryptoQuant blog.
Where is Bitcoin on this chart now?
As shown in the image below, Bitcoins Exchange Whale Ratio sits at a level of 0.90 at press time, which means conditions are ripe for massive dumping, ”according to CryptoQuant.
Image: CryptoQuant.
Bitcoin has experienced sudden declines on several occasions the last time such levels were hit. In March 2020, when BTC fell below $ 4000 for several hours, the tool peaked at 0.90. The tool stayed above 0.85 even earlier in November 2018, when Bitcoin fell from over $ 6,000 to below $ 3,900.
Bitcoin is trading above $ 45,000 at the moment and has risen almost 15% in the last few days alone. But given the resistance there is at the $ 46,000 level, could the Whale Dumping tool be correct? Only time can tell.
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