Bitcoin Whale Presence On Derivatives Still High, More Volatility Ahead?

On-chain data shows Bitcoin whales are transferring large amounts to derivatives exchanges right now, a signal that more volatility could be ahead for the crypto.

As explained by an analyst in a CryptoQuant post, BTC whale activity on derivatives exchanges still seems to be high.

The relevant indicator here is the “all exchanges to derivatives exchanges flow,” which measures the total amount of Bitcoin moving from spot exchange wallets to derivatives.

When the value of this metric spikes up, it means whales are currently moving a large number of coins to derivatives exchanges right now.

Such a trend usually occurs around lows in the price of the crypto as whales look to get themselves long positions.

Related Reading | Bitcoin Recovery Slows Down As Whale Inflows Remain Elevated

On the other hand, low values of the indicator show whales aren’t moving much coins to derivatives at the moment. This kind of trend has historically lead to tops in the value of the coin.

Now, here is a chart that shows the trend in the Bitcoin all exchanges to derivatives flow over the last couple of years:

As you can see in the above graph, the Bitcoin spot to derivatives flow has spiked up recently, suggesting that whale activity is pretty high right now.

In fact, the current value of the indicator is actually the highest ever in the history of the cryptocurrency, implying there is an all-time high rate of whales on derivatives currently.

Related Reading | Bitcoin May Have Hit Bottom According to These Indicators, BTC Targets $23K?

Historically, the price of the crypto has observed significant volatility whenever the metric’s value has been elevated.

Based on this trend, the quant believes that the value of the coin could still see further fluctuations in the near future.

The analyst also notes that a reduction in the all exchanges to derivatives flow will need to be there, for the volatility to die down.

At the time of writing, Bitcoin’s price floats around $21.1k, up 4% in the last seven days. Over the past month, the crypto has lost 27% in value.

The below chart shows the trend in the price of the coin over the last five days.

After hitting a low of below $18k a week ago, Bitcoin has been trying to recover. So far, the crypto has managed to break above $21k again, but it’s yet unclear whether this recovery will last.