A high-volumed transfer to a Bitcoin exchange wallet made on February 21 has raised calls for a broader price correction among risk-averse traders.
An entity (or a group of entities) credited about 28,000 BTC worth over $1.5 billion to an address that reportedly belongs to OKEx’s over-the-counter services. A Twitterati noted that the OTC address further credited BTC into several wallets, one of which reportedly belongs to a “rich” address that has shown associations with multiple cloud mining scams and money laundering activities in Asia.
Analysts perceive larger crypto transfers to exchanges and their associated services as a sign of imminent selling pressure. A trader most likely deposits bitcoins to public wallets when s/he intends to sell them for cash or exchange them for other cryptocurrency tokens.
Conversely, larger withdrawals point to their intention of not selling/exchanging but holding the bitcoins.
Of late, data on exchanges showed massive drops in exchanges’ BTC reserves, dropping by around 635,000 from its March 2020 top, just shy of 3 million. They largely coincided with a dramatic rise in the BTC/USD exchange rates, which rose by around 1,200 percent in the same period.
The OKEx deposit, as mentioned above, meanwhile, appeared when Bitcoin was showing signs of topping out. On Sunday, the cryptocurrency achieved a new price milestone above $58,000, leaving the Twitterati concerned about an imminent sell-off ahead.
“The ‘OKEx Whale’ is ‘LOUD’ in the way they conduct business, they don’t care about #hodl or #lazereyes,” the pseudonymous blockchain investigator explained. “[It is] happy to market dump on you. This coin flow tells us they now have ammo to increase sell-pressure in the future.”
A Short-term Shock?
There are also possibilities that the market ends up absorbing the selling pressure as Bitcoin grows into mainstream investors’ conscience as a safe-haven asset.
Ben Lilly, a cryptocurrency economist, penned a paper that focused on an ongoing liquidity crisis in the Bitcoin market. He stated that three sectors: crypto-enabled investment firms, corporations/institutions, and decentralized finance, have been actively sucking Bitcoin’s supply out of the exchanges.
Square, Bitwise, Stone Ridge Holdings, Ruffer (yes sold back some, but still relevant): 72k
185k BTC to this group
— Ben Lilly (@MrBenLilly) February 17, 2021
“It means bitcoin is in fact becoming scarce. If this continues, a liquidity crisis will transpire pushing prices considerably higher.”
Technically, Bitcoin expects to extend its short-term upside bias due to a reasonable relative strength indicator reading and well-defined support levels in its 20- and 50-4H moving averages.