On-chain data shows the Bitcoin whales have been dialing back risk on derivatives exchanges following the latest downturn in the cryptocurrency.
Bitcoin Inter-Exchange Flow Pulse Has Just Turned Red
As explained by CryptoQuant founder and CEO Ki Young Ju in a new on X, the Bitcoin Inter-Exchange Flow Pulse is now giving a red signal. The Inter-Exchange Flow Pulse (IFP) is an indicator that tracks the BTC movements between spot and derivatives exchanges.
When the value of this metric rises, the amount of cryptocurrency going from spot to derivatives platforms goes up. Such a trend implies that large entities like the whales are potentially looking to open up new positions in the derivatives market.
On the other hand, a decline in the indicator suggests investors are transferring fewer coins to the derivatives exchanges. This trend could signal a decreasing appetite for risk positions in the sector.
Now, here is a chart that shows the trend in the Bitcoin IFP, as well as its 90-day simple moving average (SMA), over the past decade:
As displayed in the above graph, the Bitcoin IFP had been climbing earlier, but the metric seems to have reversed its direction recently, as it’s now heading down instead. Following the latest decline, the indicator has crossed below its 90-day SMA.
Historically, the IFP observing a cross with its 90-day SMA has signified a market sentiment shift. A breakout above this line suggests the whales are willing to take risks with the asset again, which can potentially be a bullish signal.
The chart shows that such a cross occurred around both the 2018 and 2022 bear market lows. On the other hand, a plunge under the 90-day SMA usually takes place near tops, as it implies the whales are looking at derivative positions as too risky.
As the indicator has once more seen the latter type of crossover, it’s possible that the asset could end up facing some bearish momentum. This possible shift to a bearish sentiment, however, doesn’t have to last for too long.
The previous instance of the IFP dropping below its 90-day SMA in January. This crossover coincided with Bitcoin’s downturn following the spot exchange-traded fund (ETF) approval.
The bearish momentum ended up only temporary, though, as the cryptocurrency soon found a breakout that led to its new all-time high (ATH). The asset observed only a temporary effect from this crossover in 2016 before catching back an uptrend into the 2017 bull run.
It remains to be seen where this bearish Bitcoin IFP crossover will lead to this time.
BTC Price
Bitcoin hasn’t seen an end to its recent decline, as its price has now dropped to $61,200.
Featured image from Dall-E, CryptoQuant.com, chart form TradingView.com
Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.
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Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.
In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.
Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.
Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..
Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.
Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.
As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.
Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.
Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.
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