Crypto Markets Analysis: Bitcoin 'Whale' Deposits on Exchanges Surpass Withdrawals

"Whale" investors have recently been depositing bitcoin to exchanges faster than they’ve been withdrawing the asset, a possible sign of near-term profit taking that could send prices lower.

But this resulting price movement is unlikely to upset markets significantly.

Whales are investors holding at least 1,000 bitcoin. Because whales control large amounts of BTC, their purchases and sales can have an outsized impact on markets. Tracking their activity can offer insights into potential price direction.

Per on-chain intelligence firm Glassnode, the net volume of BTC from wallets to exchanges has been increasing since Jan. 22. The movement of coins onto exchanges is often a bearish signal reflecting investors intent to sell assets.

To be sure, the number of whale deposits to exchanges has declined in recent weeks, which in isolation is bullish. But the volume of deposits to exchanges exceeds the number of withdrawals on a relative basis, which is not. The withdrawal of assets from exchanges is generally a bullish signal.

Historically, the net volume metric tends to move in waves. Although the current development does not guarantee a selling spree, it may foreshadow what larger investors will do. A prolonged movement of bitcoin to exchanges would signal that larger holders are preparing to sell, which could lead to a price drop. The movement is in early stages, though.

The number of whales overall, which hit a three-year low of 1,670 on Jan. 1, has more recently inched up to 1,678.

Bitcoin’s price has increased 40% over the same time period. The sharp push higher has left investors with the tempting prospect of taking profits. While the aggregate increase in the total number of whales is negligible, the direction of change warrants monitoring.