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.
The highlighted address allegedly belongs to a bitcoin scam artist. Source: This Is Bullish
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.
Bitcoin reserves on all exchanges plunged heavily since March 2020. Source: CryptoQuant
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.
“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.
Source: Calls for Bitcoin Plunge Emerge Over Mysterious .5bn BTC Transfer