Bitcoin has observed a sharp retrace to $95,000 in the past day as on-chain data shows whales have been busy depositing to exchanges.
Bitcoin Has Almost Entirely Retraced Its Gains From Christmas
Bitcoin renewed optimism among investors when it edged close to the $100,000 mark during the rally over Christmas Eve and Christmas Day, but in the past day, the asset has decided to crush these hopes as its price has crashed.
From the chart, it’s visible that Bitcoin is now down to the $95,700 level, which isn’t terribly higher than the $94,100 mark that the asset was trading at prior to this rally.
The bearish price action may not be entirely unexpected when considering what on-chain data has been saying.
BTC Whales Have Made Massive Exchange Inflows Recently
As pointed out by analyst Ali Martinez in a new post on X, the exchanges have received massive Bitcoin deposits over the past week. The indicator of relevance here is the “Exchange Reserve,” which keeps track of the total amount of BTC that’s sitting in the wallets of all centralized exchanges.
When the value of this metric rises, it means the holders are making net inflows to these platforms. As one of the main reasons why investors use exchanges is for selling-related purposes, this kind of trend can have bearish implications for the asset.
On the other hand, the indicator going down implies the outflows are overwhelming the inflows, and a net amount of the asset is entering exchange-associated wallets. Such a trend can be a sign that the holders are accumulating, which can naturally be bullish for the price.
Now, here is the chart from the on-chain analytics firm CryptoQuant shared by Martinez that displays the trend in the Bitcoin Exchange Reserve over the past couple of weeks:
As shown in the above graph, the Bitcoin Exchange Reserve was in a decline during the price rally earlier in the month, implying the investors were buying and helping fuel the run.
This wasn’t the case leading up to and during the Christmas rally, as the indicator registered a huge increase instead. In total, the investors deposited 33,000 BTC to these platforms over the past week, worth approximately $3.15 billion at the current exchange rate.
Most of these deposits came on Christmas Eve, as is clearly visible in the chart. Thus, it seems the whales were preparing to sell in advance, and once they thought the price got high enough by Christmas, they pulled the trigger, resulting in a price crash.
The Bitcoin Exchange Reserve may now be to keep a close eye on, as any reversals on its graph would mean the investors feel the prices are low enough to again be worth buying at.
