Will Bitcoin See Another Sharp Drop in February?

▲ Bitcoin (BTC), decline, bear market/ChatGPT-generated image ©

Bitcoin (BTC) has extended its streak of monthly bearish candles to five consecutive months, prompting concerns over a potential further sharp drop in February amid mounting whale selling pressure and surging volatility.

According to investment-focused outlet FXStreet on February 17 (local time), BTC has slipped below the $70,000 level in February, reinforcing downward pressure. Notably, the whale inflow ratio on Binance has surged to its highest level in more than two years. The whale inflow ratio refers to the proportion of BTC inflows from the top 10 largest transactions relative to total exchange inflows, with higher figures indicating a greater likelihood of large-scale selling.

Data from on-chain analytics firm CryptoQuant shows that the sharp rise in the seven-day average whale inflow ratio coincided with BTC’s drop below $70,000. A key factor was identified as a large volume transfer from a wallet labeled by Arkham as belonging to Garrett Jin to Binance. The wallet has reduced its holdings by more than 10,000 BTC since early February and has sold over 67,000 BTC in total since August last year, when BTC was trading above $110,000. On-chain tracking account Lookonchain reported that 5,000 BTC were transferred to Binance and sold in February.

Such whale selling adds further strain amid already weakened market sentiment. During uptrends, large sell orders can be absorbed by new demand, but in a subdued investment climate, selling pressure is more likely to trigger sharp price declines. Indeed, Bitcoin’s historical volatility has surged to its highest level in a year. Historical volatility measures the magnitude of price fluctuations over a set period, and higher readings indicate an increased likelihood of sharp short-term swings.

Analysts warn that simultaneous increases in whale inflows and volatility could amplify downside risks. The outlet projected that if selling pressure accelerates, BTC could fall to the $55,600 level, aligning with the lower target of a bear flag pattern.

On the other hand, reclaiming the $70,800 level is seen as crucial for short-term stabilization. Failure to regain this price range would make it difficult to rule out additional corrections within February.

Disclaimer: This article is for investment reference purposes only and the publisher is not responsible for any investment losses resulting from its use. The information should be interpreted solely for informational purposes.