BitMEX Whales Buy Bitcoin: What History Says Will Happen Next

Keshav Verma

1 year ago

3 mins read

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On-chain data shows the Bitcoin price has followed a particular pattern when the BitMEX whales have made large withdrawals.

Bitcoin Exchange Netflow For BitMEX Has Seen A Red Spike Recently

As an analyst in a CryptoQuant Quicktake post pointed out, the cryptocurrency exchange BitMEX has recently observed significant withdrawals from the whales.

The indicator of interest here is the “exchange netflow,” which tracks the amount of Bitcoin entering or leaving any exchange’s wallets. The metric’s value is calculated by subtracting the outflows from the inflows.

When the value of this metric is positive, it means that the inflows outweigh the outflows right now, implying that the investors are depositing a net number of coins to the platform.

Generally, one of the main reasons holders want to transfer their BTC to exchanges is for selling-related purposes, as this trend can have a bearish impact on the asset’s price.

On the other hand, the negative indicator implies net withdrawals are taking place on the exchange. Such a trend can suggest either some fresh buying is occurring or some existing investors are simply transferring the BTC they already own towards self-custody.

In either case, the holders withdrawing from the exchange’s custody can be a bullish sign for the cryptocurrency, implying that these investors potentially plan to hold onto their coins for extended periods.

Now, here is a chart that shows the trend in the Bitcoin exchange netflow for the BitMEX platform over the last few months:

The value of the metric appears to have been quite negative in recent days | Source: CryptoQuant

As displayed in the above graph, the Bitcoin exchange netflow for BitMEX has registered large negative values just recently. The investors have withdrawn about 4,000 BTC (equivalent to $168.3 million at the current exchange rate) from the platform during this net outflow spree.

The quant has explained that the price of the cryptocurrency and this metric have followed a specific pattern whenever this trend has occurred. Below is a zoomed-out indicator chart showing the previous instances where negative spikes took form.

The trend in the BitMEX exchange netflow over the last few years | Source: CryptoQuant

“When a significant volume of Bitcoins is observed leaving BitMEX, one of the leading cryptocurrency trading platforms, it often signals the formation of local bottoms in the price of Bitcoin (BTC),” notes the analyst.

The graph shows that large net withdrawals also occurred on the exchange right before the current rally in the cryptocurrency’s price began in October of last year.

It’s possible that these historical negative spikes in the indicator corresponded to buying from these BitMEX whales, which helped the price bottom out and turned around.

Given this historical pattern, the latest net withdrawals may have a similar effect to some degree on the coin. The quant cautions, however, that “it is essential to closely monitor these trends, as large inflows into the exchange can have the opposite effect, potentially leading to a decrease in BTC price.”

BTC Price

Bitcoin has erased its recent recovery as the asset’s price has returned to the $42,000 mark now.

Looks like the price of the asset has returned to an overall sideways trajectory | Source: BTCUSD on TradingView

Featured image from Thomas Lipke on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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