There are numerous things going on in the crypto space, multiple data driven indicators suggesting the bear market whereas the information or fundamental indicators or institutional actions suggesting the bull market. In such situations, it is important to understand both perspectives and not get flown into the river of news and misconception. In my recent articles, we saw the actions of large institutions and how they are indicating the bull market and looked into some of the on-chain as well as off- chain indicators. In case you missed my previous articles, check out the list of those articles at the end of this article.
In this article, we will go through one of the most important trading indicators or say a chart, 'Exchange Whale Ratio'. So, let's dive into it...!!
[Before diving remember that the purpose of this article is to share the information and my opinion on it. Consider it as introduction to indicator, DYOR & then take financial decisions based on it!]
Introduction: Exchange Whale Ratio
Exchange Whale Ratio is the ratio of the top ten inflows on an exchange to the total inflow on the exchange. This indicator had been a very powerful indicator historically, so it is obvious that we should look into it and market might repeat the historic patterns.
First, the indicator is read as - if the value of the indicator is high then it suggests that whales' contributions is high in the exchange inflow. And opposite to that, if the value of the indicator is low then it suggests that the whales are not contributing to an exchange inflow.
Important thing to note is that this indicators' value is not that important but the trend it is in is very much indicates lot of things. We will see that in next section.
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Current Exchange Whale Ratio
Now look into the chart below, you can see the 'exchange whale ratio' plotted over the price chart of Bitcoin. You might have noticed that the exchange whale ratio is at all time low, previously only in February 2018 it was this low. What does that mean?
source: cryptoquant.com
If you can see historic values of the Exchange Whale Ratio, there are three directional arrows in Feb 2018, and May 2021. There, the whale ratio started bouncing back and it caused the drop in Bitcoin price. Here we can see the pattern, whenever the Exchange Whale Ratio bounce back from its low, the Bitcoin price starts to go down.
As we have already seen, current Exchange Whale Ratio is at all time low, means it can bounce back anytime and that bounce back suggests the drop in the Bitcoin price, which surely will be followed by other Altcoins. So, be ready with your stop-losses and make sure you safeguard your capital with any market situations.
Hope you guys find this short article informative! If yes, then do follow me and share your views on the current crypto market in the comment section.
Thanks for Your Time!
