Bitcoin has bounced back from the higher end of the $ 20,000 price zone. At the time of writing, BTC is trading at $ 32,475 with volatility rising over the past few days.
BTC jumps to previous support on the daily chart. Source: BTCUSD Tradingview
The bulls had a tough time in May and June as the bears took over the price action with increased selling pressure on all exchange platforms.
When Bitcoin hit critical support at $ 29,000, CryptoQuant saw an increase in BTC inflows into the exchange. As the image below shows, the last time that much BTC went public was in March 2020, when the price of BTC fell just below $ 4,000 on “Black Thursday”.
In addition, CryptoQuant recorded a 7-day moving average of net cash flows that turned positive. The last time this metric was at a similar level, Bitcoin saw a distribution in the range of $ 50,000.
Many traders have questioned the validity of the amount of BTC inflows for exchange as a relevant metric for predicting price action. Some believe that whales can easily manipulate the market by sending BTC to these platforms and taking advantage of investor fear.
However, Ki-Young Ju, CEO of CryptoQuant, considers this type of “psyops” to be almost impossible. The platform uses a mechanism to measure the data of the exchange flows based on the number of transactions. Hence, they compute their data by looking at aggregated flows rather than a single transaction.
Because of this, we need to see aggregated flows and not a single transaction like Whale Alert. Any transaction can easily be manipulated by whales. Whales have to send over 10,000 BTC to ruin our data, but most of the large TXs are internal transmissions from exchanges.
The only way this data is inaccurate, Young Ju adds, is if whales are coordinating their transactions. In this way, the exchanges receive tens of thousands of BTC inflows and “the data is ruined”. Young Ju added:
(…) but it hasn’t happened yet. It is very expensive and dangerous for safety reasons, so I think whales cannot do this orchestrated effort
Bitcoin bear market confirmed?
In a separate tweet, the CEO of CryptoQuant claimed that Bitcoin “confirmed” a bear market trend. He based his statement on the high amount of BTC inflows into the exchange, as shown in the platform’s Whale Capitulation Index.
Whenever whales have started selling BTC in these quantities, the price tends to fall, as suggested by CryptoQuant’s chart. However, Young Ju said investors shouldn’t rely on a single indicator to predict price action.
Young Ju received some critics for this statement. The economist and crypto analyst Michaël van de Poppe responded to this claim as follows: “I see 0 correlation” between a bear market and the inflows of the BTC exchange. The executive later clarified:
To be clear, I’m assuming my bearish bias at $ BTC won’t last long (maybe just a couple of weeks) as the market looks good in the long run in terms of supply / demand (e.g. stablecoins ratio ( USD) and SSR). So don’t get me wrong, I’m not saying it’s over.