Binance saw its biggest Bitcoin (BTC) outflow in history on Nov. 3, according to data from CryptoQuant. A total of 58,861 BTC were withdrawn on a single day, equivalent to $816 million.
The significant spike in outflows could suggest two things. First, it might show that whales could be bracing for a rally in the near term. Second, an over-the-counter deal could have occurred, causing whales to move their funds.
On-chain activity surges highlight Bitcoin whale movements
In addition to the unprecedented increase in outflows on Binance, whales are increasingly moving their funds.
Researchers at Whalemap, an on-chain market analysis firm that tracks Bitcoin whale activity, said large volumes have been spotted. The analysts explained:
“On-chain activity is high. Large volumes of HODLer coins are moving in profit and are going straight into whale wallets.”
When whale funds move in profit to other whale wallets rather than exchanges, this often indicates that whales foresee an uptrend.
Whales and high-net-worth investors generally store their funds in non-custodial wallets. These are addresses that holders have direct control over, which are usually kept offline for security purposes.
Hence, whales tend to transfer their funds into exchanges when they are preparing to sell their holdings. If outflows increase, then it means whales do not intend to sell in the near term.
In response to questions on whether the recent whale activity indicates a bullish trend, Whalemap analysts wrote:
“Let us see. The way I see it is that this bubble should be a strong level for us for some time.”
There are three possible reasons that whales might be increasingly moving their funds off exchanges.
First, the appetite to sell Bitcoin above $13,000 has become lower. On higher time frames, like the weekly and monthly charts, BTC has seen a clean breakout. Above $14,200, there is little resistance until the all-time high at $20,000.
Second, there are large whale clusters above $13,000, particularly in the $13,000 to $13,300 range. Whales might be confident that a major drop will not occur as a result.
Third, there could be a growing demand for OTC deals as whales seek liquidity outside of exchanges for large orders. Since exchanges could trigger massive volatility, the OTC market could be practical for major deals.
The $13,850 to $14,100 range is the critical resistance zone
Bitcoin has been retesting the $13,850 to $14,259 in the past 24 hours, despite the risk of the U.S. elections inducing volatility. The price briefly rose to $14,066 on Nov. 4 before quickly plummeting to $13,525 and within the last hour Bitcoin price reached a new 2020 high at $14,259.
The ideal scenario for Bitcoin in the near term is to stay above $13,850 and remain stable on top of this level. This would indicate that BTC flipped an important resistance level as support, which would provide a stronger foundation for a sustainable rally.
Until BTC convincingly stays above $13,850 and consolidates under $14,200, it remains at risk of seeing a minor pullback.