Bitcoin’s wave of forced selling appears to be calming down-but the biggest holders are still sending large stacks of BTC to centralized exchanges, keeping a lid on any meaningful recovery, according to a new analysis from CryptoQuant.
The on-chain data provider reports that exchange inflows have fallen sharply since the height of the recent correction, when Bitcoin tumbled from its October peak. The asset is now trading roughly 46% below that high, yet the behavior of so‑called whales-wallets controlling large amounts of BTC-remains notably bearish.
Exchange deposits drop from peak levels
At the most intense point of the selloff, around February 6, centralized exchanges recorded an influx of roughly 60,000 BTC as the price slid toward the 60,000‑dollar mark. Historically, such spikes in deposits precede or accompany heavy selling, as traders move coins from cold storage or self‑custody to trading venues in order to exit positions.
Over the last week, however, average daily deposits have retreated significantly. CryptoQuant estimates that inflows now sit near 23,000 BTC per day on average for the past seven days-less than half of the early‑February peak.
“This moderation suggests that the acute sell‑off phase has eased, even as exchange flows remain elevated relative to prior months,” the report notes. In other words, the panic or capitulation phase appears to be over, but the market has not yet returned to the calmer conditions seen earlier in the cycle. With fewer coins being sent in en masse, the immediate, aggressive sell pressure on spot markets has lessened.
Lower inflows, but not yet a bullish signal
A decline in exchange inflows is generally interpreted as a positive sign for price stability. When fewer coins arrive on exchanges, there is less available inventory to be market‑sold at any given moment. That typically reduces the likelihood of sharp, cascading price drops triggered by heavy spot selling.
Still, CryptoQuant stresses that inflows remain elevated when compared with previous months. The market has moved from a “red alert” environment of intense profit‑taking and risk reduction to a more neutral, but still cautious, phase. For a sustained uptrend to resume, analysts usually look for both reduced inflows and an increase in long‑term holding behavior.
In this context, the quality of inflows-who is sending coins, not just how many-becomes critical. And this is where the latest data turns more concerning for bulls.
Whale activity dominates the current flows
While the overall volume of coins heading to exchanges has decreased, the composition of those deposits has shifted in favor of large holders. CryptoQuant’s data shows a rising share of total inflows coming from whale addresses, suggesting that the biggest investors are still positioning to sell, rebalance, or otherwise reduce exposure.
Whales have an outsized impact on price action because their orders can move order books and influence market sentiment. When they consistently move large amounts of BTC to exchanges, it often signals either:
– Preparation to realize profits or cut losses
– Strategic repositioning into other assets or stablecoins
– Hedging via derivatives, supported by available spot collateral
Whatever the motive, the net effect is more potential supply sitting on exchanges, ready to hit the market if conditions warrant.
Why whales might still be selling
Several factors could explain why the largest Bitcoin holders continue to “dump” on exchanges even as the broader selloff appears to be slowing:
1. Profit realization after a long rally
Bitcoin’s surge to its October peak left many early or mid‑cycle buyers with substantial unrealized gains. Whales, often more disciplined in risk management, may simply be locking in profits after a strong multi‑month rally.
2. Portfolio rebalancing
Institutional‑grade investors and sophisticated traders frequently rebalance portfolios when one asset outperforms. Bitcoin’s earlier run‑up could have pushed allocations beyond target ranges, prompting controlled selling to restore balance across assets.
3. Macro uncertainty
Interest rate expectations, regulatory developments, and broader risk‑asset volatility can all influence big holders. In periods of uncertainty, even fundamentally bullish investors may trim positions to increase cash reserves or move into lower‑volatility assets.
4. Liquidity needs
Some whales-particularly miners or early investors-periodically sell BTC to cover operational costs, redemptions, or other capital needs. Elevated prices relative to historical averages still make current levels attractive for such structural selling.
What easing sell pressure really means
The key nuance in CryptoQuant’s report is that “lower sell pressure” does not automatically translate into immediate upside. Instead, it signals that:
– The worst of the forced or panic selling may be behind the market.
– Price declines are less likely to be driven by sudden, oversized inflows to exchanges.
– However, a consistent overhang of potential supply from whales can still cap rallies.
In practice, this mix often leads to choppy, range‑bound trading rather than a clear directional trend. Without relentless selling, bears lose momentum-but as long as whales keep feeding supply into exchanges, bulls struggle to break resistance and hold higher levels.
Implications for short‑term and long‑term investors
For short‑term traders, elevated whale inflows can mean:
– Higher intraday volatility when large sell orders hit the books
– Fake‑out rallies that stall as soon as bigger players start unloading
– The need to watch order book depth and large on‑chain transfers closely
For long‑term holders, the current environment is more about patience than panic. Historically, periods where:
– Panic selling cools down, and
– Whales gradually distribute into strength
have often been followed by a consolidation phase that sets the stage for the next major move-up or down, depending on macro and adoption trends.
The broader market context
Bitcoin sliding 46% from its October high has already flushed out many over‑leveraged positions and short‑term speculators. Derivatives data in recent weeks has shown declining open interest and reduced funding rates, indicating that some of the froth has left the market.
Spot‑focused indicators like exchange inflows provide a complementary view. The initial rush of BTC to exchanges around early February lined up with heightened fear and risk aversion. Now, with inflows roughly halved, the market appears to be transitioning from a “liquidation and fear” phase to a more calculated environment where big players adjust their positions with less urgency.
Yet until whale behavior flips-from heavy depositing to net accumulation or withdrawals back to cold storage-the balance of power remains tilted toward supply rather than scarcity.
How to interpret whale deposits without overreacting
On‑chain data is powerful, but it can be misleading if taken in isolation. A few points to keep in mind when interpreting continued whale deposits:
– Deposits do not guarantee immediate selling.
Some whales may be moving coins to exchanges to access lending, margin, or derivatives products rather than to sell outright.
– Context matters.
If whale deposits rise while price also climbs, it may signal distribution into strength. If deposits rise during a decline, it can point to capitulation or panic exits.
– Time horizon is critical.
Long‑term Bitcoin trends have historically been driven more by adoption cycles, halvings, and macro liquidity than by any single wave of whale selling.
Investors who rely on on‑chain metrics are better served by looking at trends over weeks and months rather than reacting to every large transfer.
What to watch next in on‑chain data
Going forward, several metrics can help confirm whether the current easing of sell pressure will evolve into a more constructive environment:
– Exchange reserves: A sustained drop in total BTC balances on exchanges typically signals accumulation and reduced sell pressure.
– Whale net flows: A shift from net deposits to net withdrawals by large holders would be a strong sign that distribution is slowing.
– Long‑term holder supply: Growth in coins held for longer periods without movement usually correlates with tightening supply and growing conviction.
– Realized profit and loss: Lower realized losses and more modest profit‑taking suggest the market has digested the worst of the volatility.
If these indicators begin aligning in a more bullish direction, the current phase could be remembered as a consolidation period rather than the start of a prolonged downtrend.
Strategic takeaways for market participants
For traders and investors navigating this environment:
– Expect muted but persistent selling from large holders, especially on price rallies.
– Treat sharp moves higher with caution if they coincide with spikes in whale deposits.
– Recognize that reduced inflows are a necessary but not sufficient condition for a durable recovery.
– Use this phase to reassess risk management, position sizes, and time horizons rather than chasing short‑term noise.
CryptoQuant’s latest analysis paints a picture of a market that has stepped back from the edge of a deeper crash but is still wrestling with sizable overhead supply from whales. Until those large players stop feeding coins to exchanges-or start pulling them back into long‑term storage-Bitcoin’s path higher is likely to remain uneven and contested.