BTC has had a remarkable 9 day streak of upside candles. We’ve been following the whale wallet holding the third largest amount of BTC and have found some interesting signals and activity. The whale entity, at one point, held over 116,841 BTC. Its current total BTC holdings stand at 113,841.

The recent sales from this address since April 2021 have accurately marked local tops in BTC, as shown in the chart below.

This doesn’t mean that bitcoin’s prices will plummet. This entity has demonstrated that it strategically sells bitcoins after large rallies in order to profit, rebalance and buy back on dips. Since the wallet was created, BTC holdings have increased each month.

In the charts below, the vertical red boxes indicate when the whale entity transferred BTC from his account to exchanges.

Onchain Signals

The first sign is the All Exchange Reserves trending higher. Investors are depositing BTC onto the exchanges, which causes BTC reserves to rise. This is a warning sign for BTC, particularly if prices have experienced a large rally.

The second signal is the All Exchange Netflow Metric, which is trending higher. This metric measures the difference between outflows and inflows of exchanges. A positive difference means that more BTC is flowing into exchanges. This signals the intent to sell. A negative difference signals that more BTC is leaving exchanges. This is bullish.

The third signal is a positive funding rate. Investors who hold long positions on derivatives exchanges must pay less to maintain their position if the funding rate is positive. A higher funding rate, particularly if it is positive for a long time, can increase the likelihood of a pullback or local top.

Technical Signals

The first technical indicator is the Stochastic RSI. This is a more sensitive indicator derived form the relative strength index. When the Stochastic RSI is above 80, it signals price is overbought.

The second technical signal is that the 4-hour TD Sequential indicator flashes the 9th candle. This indicates that BTC rallied higher for 9 candles consecutively on the 4-hour chart. It also signals the possibility of a pullback or local top.

The third technical signal is the 4-hour relative strength index hitting overbought conditions such as a reading above 70.

The fourth technical signal flashes when the Bollinger Band’s upper band is exceeded by the daily or 4 hour chart. The Bollinger Band measures deviations in price movements from a specific moving average.

When the above-listed metrics and indicators are flashing signals it indicates the possibility of a local top, or an incoming pullback for BTC. It does not necessarily mean that BTC will crash. However, this indicates that the price has reached an extreme point and the whale entity may be trying to sell. This will likely stop the price from climbing in the short term. To get a better signal, it is important to include other types of analysis.

As previous activity has shown, the whale entity has always bought back its position after selling and continues to net accumulate BTC over time. Technical and Onchain signals point to a near-term downside risk, but the long-term trend is still firmly bullish.