On-chain data shows that bitcoin whales are moving large amounts to derivatives exchanges right now, a sign that more volatility could be ahead for the crypto.
Bitcoin derivatives flow from all exchanges continues to show high value
As explained by an analyst in a Cryptoquant post, BTC whale activity on derivatives exchanges appears to be still high.
The relevant indicator here is “all exchange flows to derivatives exchanges”, which measures the total amount of bitcoins moving from spot exchange wallets to derivatives.
When the value of this metric increases, it means that whales are currently moving a large number of coins to derivatives exchanges.
Such a trend usually occurs around crypto price lows as whales find themselves looking to get long positions.
Related Reading | Bitcoin’s recovery slows as whale arrivals increase
On the other hand, the lower value of the indicator suggests that whales are not moving more coins into derivatives at the moment. Such a trend has historically led to an upward trend in coin value.
Now, here’s a chart that shows the trends in derivatives flows from all bitcoin exchanges over the years:
Looks like the value of the metric has been quite high recently | Source: CryptoQuant
As you can see in the graph above, bitcoin spot-to-derivatives inflows have recently increased, indicating that there is a lot of whale activity right now.
In fact, the current value of the indicator is actually the highest in the history of the cryptocurrency, meaning whales are currently trading high on derivatives.
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Historically, the price of crypto has seen significant volatility whenever the value of the metric has moved higher.
Based on this trend, Quantity believes that the coin may see further volatility in value in the near future.
Analysts also note that derivative flows across all exchanges will need to be reduced, in order to reduce volatility.
At the time of writing, bitcoin price is floating around $21.1k, up 4% over the past seven days. In the past month, the crypto has lost 27% in value.
The chart below shows the coin’s price trend over the past five days.
The value of the crypto seems to have surged up over the last couple of days | Source: BTCUSD on TradingView
After hitting a low of less than $18ka a week ago, bitcoin is trying to recover. So far, the crypto has managed to break above $21k again, but it is not yet clear whether this recovery will last.
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com