Bitcoin Whales Dial Back Risk on Derivatives Exchanges Following Latest Downturn

On-chain data shows the Bitcoin whales have been dialing back risk on derivatives exchanges following the latest downturn in the cryptocurrency.

Bitcoin (CRYPTO: BTC) price continues to slide following the latest downturn in the cryptocurrency. The apex coin is trading at a loss of 5.5% over the past 24 hours at the time of writing.

On-chain data shows the Bitcoin whales have been dialing back risk on derivatives exchanges.

Bitcoin Inter-Exchange Flow Pulse Shows A Red Signal

The Bitcoin Inter-Exchange Flow Pulse is now giving a red signal, as explained by CryptoQuant founder and CEO Ki Young Ju in a new post on X.

The Inter-Exchange Flow Pulse (IFP) is an indicator that follows 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.

Related: PEPE Has 80% Of Holders In Profit: How It Compares To DOGE & BTC

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 being only temporary, 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 Analysis

Bitcoin price shows a recent decline of 11.6% over the past week. The apex coin also shows a loss of 31.8% in the past month.

At the time of writing, BTC price is showing a downturn of 5.5% over the past 24 hours.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-whales-dial-risk-derivatives-exchanges-downturn.html

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