On-chain data shows that the proportion of Bitcoin whales has increased recently as leverage in the market has hovered around an all-time high.
Both Bitcoin whale and leverage ratios are around ATH right now
As an analyst pointed out in a CryptoQuant post, BTC investors are currently involved in some high-risk trading in the futures market.
The “whale trade index” is an indicator that measures the ratio of the sum of the top ten trade inflows to total trade flows.
Since the top ten transfers to exchanges are supposed to come from whales, this metric tells us whether or not whales are active in the market right now.
When the ratio value is high, it means that the whales are making a large contribution to the trade inflows at the moment.
Now, here is a graph showing the trend in the proportion of Bitcoin whales in recent years:
Looks like the value of the metric has been elevated in recent days | Source: CryptoQuant
As you can see from the chart above, the amount of the release has marked the relevant trending periods for the proportion of Bitcoin trading whales.
It seems that usually every time the indicator reaches a high and then starts to decline, the price also takes a big hit.
From the chart, it is evident that the metric has risen for the past few months and is now hovering around all-time highs.
The “estimated leverage ratio” data is also displayed. This indicator tells us the amount of leverage the average trader uses in the futures market.
Bitcoin’s leverage ratio has risen sharply recently and is now at a new ATH as well, which suggests investors are taking a lot of risk right now.
Historically, high leverage in the market has resulted in a more volatile BTC price. Under these conditions, if the proportion of whales also starts to decline and now also follows the same trend as in the past, then things could turn bearish very quickly for the crypto.
At the time of writing, the price of Bitcoin is hovering around $19,500, up 2% in the last seven days. Over the past month, the crypto has gained 1% in value.
The chart below shows the trend in the price of the coin for the past five days.
The value of the crypto seems to have been trending sideways since the plunge a few days back | Source: BTCUSD on TradingView
Featured image from Peg Lemkuil on Unsplash.com, charts from TradingView.com, CryptoQuant.com