Bitcoin has been on a downward trajectory, experiencing five consecutive months characterized by red candles. Despite this trend, there remains a noticeable absence of a long lower wick, which typically signals strong buying support. Current whale data points to ongoing selling pressure that could lead to further declines if there isn’t sufficient demand to absorb the supply of the cryptocurrency.
In February, short-term traders are advised to keep a vigilant eye on various warning signals as the market continues to evolve. One significant indicator is the Whale Inflow Ratio on Binance, which measures the proportion of Bitcoin inflows attributed to the ten largest transactions in comparison to total exchange inflows. An elevated ratio often points to heightened selling pressure from large holders.
The recent drop in Bitcoin’s value, which fell below $70,000 in February, coincided with a peak in the Whale Inflow Ratio, reaching its highest point in over two years, as detailed by CryptoQuant. According to Darkfost, an analyst at CryptoQuant, this surge in inflow is not an isolated incident. There have been substantial whale transactions, particularly those transferring large amounts of Bitcoin to exchanges, which are likely influenced by Binance’s deep liquidity and a general market environment characterized by uncertainty.
This spike in inflows appears to be largely associated with Bitcoin transfers from a specific wallet identified by Arkham, believed to belong to Garrett Jin, a Chinese entrepreneur and former CEO of the now-defunct exchange Bitforex. Jin gained notoriety for successfully shorting the market during the previous October crash. Arkham’s data indicates that since early February, this particular wallet has seen a decline of over 10,000 BTC, contributing to a total offloading of more than 67,000 BTC since Bitcoin was valued above $110,000 last August.
Further tracking by Lookonchain has revealed that Jin transferred 5,000 BTC to Binance and subsequently sold this portion during February. This raises critical questions regarding whether he will continue to move significant amounts of Bitcoin to exchanges and whether other large holders will adopt similar strategies.
Additionally, the market is entering a high-volatility phase as whale activity typically leads to varied outcomes depending on prevailing market sentiment. Historically, whale transactions during bull markets can be absorbed by new demand without causing significant price declines, as they often flow to investors willing to purchase at escalating price points. Conversely, when large inflows occur amid negative sentiment, the likelihood of a sharp price drop becomes substantial.
This risk is magnified by the fact that Bitcoin’s Historical Volatility has reached its highest level in the past year. High volatility readings indicate potential for significant short-term price fluctuations. Although this volatility does not predict market direction, the combination of heightened volatility and surging whale inflows indicates an increased probability of renewed downward pressure.
Current analysis suggests that accelerating selling pressure could drive Bitcoin down to the $55,600 range, aligning with deeper bearish projections. Conversely, in order to stabilize in the short term, Bitcoin needs to reclaim the $70,800 threshold. As the market navigates through these turbulent waters, traders remain cautious, closely monitoring evolving trends and potential shifts in whale behavior.
