Bitcoin whales are taking advantage of the slowdown in the rally, as indicated by the data. The data suggests that these whales, who may have played a role in driving the recent surge, have now shifted their focus to profit-taking.
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Bitcoin Whales On BitMEX Have Changed Their Tune Recently
An analyst in a recent CryptoQuant Quicktake post suggests that the recent rally in Bitcoin may have been fueled by BitMEX whales. The key indicator to consider is the "Open Interest," which tracks the total amount of Bitcoin derivative positions open on a centralized exchange.
When the value of this metric increases, it indicates that investors are opening new contracts on the platform. Conversely, a decline in the Open Interest suggests that holders may be either getting liquidated or closing their positions voluntarily.
Here is a chart depicting the trend in Bitcoin Open Interest for two exchanges, BitMEX and Binance, over the past few weeks:
The graph illustrates a significant increase in Bitcoin Open Interest on BitMEX at the beginning of the month when the cryptocurrency's price was trading around the $38,000 level. This rise in open interest coincided with a sharp rally in BTC towards the $44,000 mark. While the open interest value for Binance also experienced an increase during the rally, the surge on BitMEX was particularly notable as it occurred in one go before the rally.
However, since BTC reached its local peak above $44,000, the BitMEX Open Interest has drastically declined, indicating a widespread closure of positions on the platform. On the other hand, the open interest value for Binance has remained high.
Additionally, the attached charts show another metric for the two exchanges: the "Funding Rates." These rates track the periodic fee that derivative traders on an exchange pay each other. A positive value indicates that long positions are paying a premium to hold their positions, suggesting a predominantly bullish sentiment among traders on the platform.
During the period of high open interest, the BitMEX Funding Rates were favorable, implying that most positions were extended. However, with the decline in the indicator, the Funding Rates have returned to neutral values.
Based on this pattern, the analyst believes that the BitMEX whales, who may have been responsible for driving the earlier rally, have already taken their profits by closing a significant portion of their positions near the peak.
Although the Open Interest has not fully retraced itself yet, the decision of most of these whales to withdraw may raise concerns about the continuation of the rally.
Bitcoin has seen some retrace during the past day as the coin’s price is now floating around $43,600.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.