TL;DR Breakdown
- Bitcoin whale movement within exchanges at a seven-year low
- Whales have predominantly been performing their trades via OTC desks
- This has been contributing to Bitcoin’s price continuing to linger below ATH.
Bitcoin whale movement in the market has long been noted to be one of the driving forces of price. At the moment, it seems their choice of where to carry out their gigantic trades is one of the factors keeping the price of Bitcoin suppressed.
Bitcoin whale movement contributing to delayed price recovery
BinhDang, a verified analyst on the on-chain data platform CryptoQuant, argued this using the 90DMA fund flow ratio and Spent Output Value Bands percentage (SOVB %) metrics.
The analyst noted that fund flow ratio, which is the rate of Bitcoin transfers involving exchanges to the network-wide transfer recorded on-chain, is at its lowest since 2015. A high value for this metric indicates that a massive Bitcoin whale movement is happening on exchanges.
In contrast, the SOVB (%) metric which can be used to pinpoint transactions happening on over-the-counter (OTC) Bitcoin trading desks has been indicating elevated activity since 2020. This shows that the Bitcoin whale movement has been going on massively outside of exchanges.
According to the analyst, this is not very favorable for the price of Bitcoin. While the Bitcoin whale movement has helped Bitcoin sustain a support level of around $40,000, the fact that they are occurring on OTC desks will make it difficult for prices to reach new highs.
“All the above elements may be why Bitcoin’s price can keep the 40K range, but the lack of coins transfers involving the exchange also keeps the price not easy to recover the old ATH soon,” the analyst surmised.
This concern is most strongly backed by market evidence. In the past few months, Bitcoin whales have been very active. Data from Santiment recently showed that in the recent past, over 4000 transactions that surpass $10 million occur daily during working days on the Bitcoin network.
While it is expected that such Bitcoin whale movements should trigger a bull rally in the long term, the price of Bitcoin has remained volatile.
Why are Bitcoin whales choosing OTC desks?
Bitcoin whales are pitching their tent outside of exchanges for reasons tied to better services provided by OTC desks for their needs. OTC crypto desks are better suited to serve institutional investors who mostly comprise the Bitcoin whale investor category.
While trades on exchanges are public by default, OTC desks offer institutional investors anonymity. OTC transactions can be conducted privately without revealing financial details of the trade to the entire public.
OTC trading also offers far deeper liquidity for institutional investors who are likely to want to invest or cash out huge sums at a go and avoid slippage. Additionally, OTC trading is easier to access for institutional investors and has more straightforward commission structures for large investors.
Recognizing this, more key players including banks have been looking to offer clients crypto services via OTC trading desks. Goldman Sachs recently facilitated its first OTC crypto options trade with Galaxy Digital.
Bitcoin is trading at $41,183, up 2.56% on the day. The surge on the day is coming after turbulent trading in the last few days. The pioneer crypto is down 5.33% in the last week
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