Bitcoin Whales in Choppy Waters: Analyst Forecasts Spike in Market Volatility

Key Points

• New Bitcoin whales are likely to increase market volatility as they move into the loss zone.
• Bitcoin and Ethereum experience significant selloffs, indicating increased market uncertainty.

The ongoing market uncertainty and bearish selloffs, characterized by high liquidations, are far from over. The volatility is expected to escalate with new Bitcoin whales entering the loss zone.

Ki Young Ju, the CEO of CryptoQuant, revealed the unrealized profit ratio chart for new Bitcoin whales, which has now entered the loss zone. This information was shared in a post on Tuesday, October 14.

Bitcoin Whales and Market Volatility

The data shows that new Bitcoin whales are beginning to experience unrealized losses as the asset’s value drops from its all-time high of $126,198. Young Ju warned that “volatility is coming”.

However, Young Ju also mentioned that this indicator cannot predict the next market movement. In June and July 2021, the red unrealized profit ratio for new Bitcoin whales led to stronger accumulation, pushing the Bitcoin price above an all-time high of $68,000. The broader crypto market, including Bitcoin, experienced a significant selloff in February 2022 when the indicator went “underwater”.

Downward Trend in Crypto Market

Bitcoin has been spiraling downward, with predictions of high volatility. On October 14, Bitcoin dropped to $111,569. This selloff coincided with the US-based spot Bitcoin exchange-traded funds recording a net outflow of $326.4 million on October 13, according to data from Farside Investors. The outflows primarily came from GBTC, BITB, and FBTC, while BlackRock’s IBIT experienced an inflow of $60.4 million.

Last week, Bitcoin-based investment products reported a net inflow of $2.71 billion. On the other hand, Spot Ethereum ETFs registered a deeper net outflow of $428.5 million, led by ETHA’s $310.1 million selloff. Ethereum also experienced a 4% drop to $3,990.

On October 12, Binance recorded a USDT inflow of approximately $1.4 billion, which brought bullish momentum to the market. However, in the past 24 hours, the largest crypto exchange experienced a net outflow of just over 190 million USDT, according to CoinGlass data.

The departure of stablecoins from centralized exchanges usually indicates that market participants are experiencing fear, uncertainty, and doubt. This negative sentiment often leads to market-wide selloffs.