Whales sell as sidelined cash dries up… “Bitcoin volatility to rise”

Bitcoin (BTC) sell-side pressure is increasingly concentrated among whales, while stablecoin funds flowing into exchanges have plunged, data showed. With the demand buffer weakening, analysts say the market structure is becoming more vulnerable to further volatility.

CryptoQuant said in its weekly cryptocurrency report on the 20th (local time) that “Bitcoin sell pressure is gradually concentrating among whales, while altcoins are facing broad-based distribution pressure.” It added that “as stablecoin inflows decline and sidelined capital shrinks, the likelihood of heightened volatility increases during bearish phases.”

Bitcoin inflows to exchanges surged to about 60,000 BTC a day during the pullback around the $60,000 level in early February, but have since fallen to roughly 23,000 BTC on a seven-day average. The acute capitulation phase appears to have eased, but the level is still considered elevated compared with recent-month averages.

In particular, the composition of inflows has changed. The exchange whale ratio climbed to 0.64, the highest since 2015. This indicates that large top-tier deposits account for most of total deposits. Average Bitcoin deposit size also reached its highest level since mid-2022. The reading suggests that institutions or large holders are driving exchange-side supply.

The altcoin market is flashing a clearer bearish signal. Average daily altcoin exchange deposits this year stand at about 49,000, up 9,000 from the fourth quarter of last year. This points to continued outflows from risk assets. Typically, rising altcoin deposits often coincide with greater sell pressure and higher volatility.

On the demand side, the drop in stablecoin inflows stands out. Net Tether (USDT) inflows hit a one-year high last November ($616 million) but have recently tumbled to around $27 million. At the end of January, net outflows reached $469 million. This suggests that the pool of sidelined capital that can be deployed into the market immediately is shrinking.

CryptoQuant said that “the simultaneous emergence of whale-driven sell pressure, altcoin distribution, and declining stablecoin inflows shows a weakened demand buffer,” adding that “this is creating an environment vulnerable to further declines or abrupt price swings in a bearish phase.”