Bitcoin whales have been buying aggressively amid the ongoing crypto market meltdown. Onchain data shows that these market participants purchased 66,940 Bitcoins on February 6 and withdrew that BTC to their accumulator addresses.
The crypto market has been on a steep decline since early this year. Last week, Bitcoin fell nearly $15,000 in 24 hours, causing a ripple effect that sent the entire market crashing by double digits. However, amid the chaos, whales have been buying the crypto asset aggressively as smaller market participants and Bitcoin miners capitulate. Julisha.co.ke previously reported major capitulation in the crypto market, signaling forced selling among major market participants.
Whales buy the dip as Bitcoin drops below $70k
According to one crypto analyst, whales have purchased large amounts of BTC during the dip. The analyst reported that on February 6, 66,940 Bitcoins flowed into accumulation addresses, marking the most significant single-day inflow since 2022.
On the same day, Bitcoin made a slight recovery, rising from $60,074 to $71,681, a 19% gain in 24 hours, according to CoinMarketCap.
Institutional flow on spot U.S. ETFs also coincided with Bitcoin’s recent recovery. According to data from SosoValue, spot U.S. exchange-traded funds recorded positive flows of $371.15 million on February 6. BlackRock’s iBIT registered the most inflows, totaling $231.62 million, while Fidelity’s FBTC logged $24.54 million in positive flows. Other ETFs like Ark & 21Shares’ ARKB and Bitwise’s BITB drew $43.25 million and $28.70 million from investors on the same day.
One crypto analyst reported on X that Bitcoin’s Sharpe ratio has fallen to -10, the lowest since March 2023. The analyst said that when Bitcoin’s Sharpe ratio dips into the negatives, it typically signals the final stage of a bear market.
He emphasized that the indicator does not signal that the bear market is over, but instead indicates that the market is “approaching a point where the risk-to-reward profile is becoming extreme.”
The analyst continued to say that the ratio is still declining, showing that BTC’s performance is not yet attractive compared to the risk being taken. He noted that the behavior tends to occur during turning zones and mentioned that the crypto asset is slowly approaching a significant area where it has previously reversed.
The analyst cautioned that the reversal phase could take several more months, and during this time, BTC could continue to correct to lower prices. He urged market participants to wait for the Sharpe ratio to improve before increasing exposure, or to build exposure gradually while Bitcoin remains down.
Researchers caution that Bitcoin’s downtrend could continue
Researchers from 10X Research also noted that BTC’s downward trajectory should be respected. In a note published on X, the researchers noted that Bitcoin is approaching a key level around $73k that held prices before the election rally pushed Bitcoin to new higher highs.
The researchers said that “current flows suggest sentiment has shifted meaningfully,” indicating that investors are not yet positioned fully to reverse Bitcoin’s ongoing downtrend.
The report also highlighted that stablecoin activity has been off-ramping and that previous ETF outflows have exerted significant pressure on Bitcoin’s price in the last few weeks. The researchers also explained that USDC issuer Circle has seen nearly $10 billion in stablecoin redemptions, pointing to “reduced participation from more regulated market participants.”
The researchers concluded the report, saying there is no clear catalyst to revive crypto just yet and emphasizing that there is little urgency to get involved. The researchers highlighted that positioning dynamics indicate that traders remain focused on deleveraging and unwinding positions rather than preparing for a rally.
At the time of this publication, Bitcoin is down 2.5% in the last 24 hours, bringing its seven-day decline to 11.35%. The crypto asset is trading at $69,134 at the time of this publication.
