Another $84M deposit begs the question: Why are Bitcoin whales in Korea selling?

CoinTelegraph

Bitcoin (BTC) whales in South Korea have been selling heavily across major exchanges throughout the past week. Data shows that multiple $100 million deposits to Bithumb have been spotted in the last three days alone.

By volume, South Korea has a much smaller cryptocurrency exchange market compared to the United States. Yet, South Korea’s cryptocurrency exchanges have seen massive inflows that are comparable with other major markets.

How To Get Free Crypto  

Large inflows into exchanges typically indicate selling pressure from whales because high-net-worth investors do not keep their holdings on exchanges. Hence, when capital flows into a trading platform, it shows an intent to sell.

BTC/USDT 1-day candle chart (Binance). Source: TradingView.com

Return of the “kimchi” premium

After two $100 million deposits to Bithumb were spotted, Korbit saw a $90 million deposit on Jan. 9.

According to CryptoQuant Alerts, 2,098 BTC, worth $84 million, were deposited into Korbit at 11:42 am KST.

Due to the discrepancy between the daily volume of South korean exchanges and major U.S.-based or international exchanges, inflows that exceed $50 million are often considered unusually large deposits.

Data from CoinMarketCap shows that Korbit ranks 21st in the global market by daily volume, processing $44 million worth of trades daily.

Hence, a $84 million deposit on a single day is an abnormally big deposit given that the exchange trades around $44 million a day, per CoinMarketCap.

Coinbase Banner  

The most likely reason behind the continuous inflows into South Korean exchanges is arbitrage.

In December 2017, when Bitcoin first surpassed $20,000 in South Korea, the dominant cryptocurrency was trading about 20% higher at times, what became known as the “kimchi premium.”

Korea premium index. Source: CryptoQuant

In recent weeks, Bitcoin has been trading around 5% higher on South Korean exchanges. This might have encouraged whales to arbitrage the premium, driving massive inflows.

However, arbitraging the premium in South Korea is not easy. South Korea has strict restrictions on capital leaving outside the country. Foreigners are also not allowed to trade on local cryptocurrency exchanges, which makes it all the more challenging.

For the arbitrage to work efficiently, whales outside of South Korea would have to supply BTC to local traders, and work as a team to pull it off.

FreeBitcoin Banner  

Whales are applying immense pressure overall

On Jan. 8, Cointelegraph reported that “mega whales” sold large amounts of BTC when the Bitcoin price first surged past $40,000.

Even as Bitcoin dipped $40,000 to around $36,000, many major whales continued to sell aggressively, pushing the price down.

In the near term, the pattern of whales taking profit and new buyers from the U.S. accumulating Bitcoin should continue. But the biggest variable that could alter the market dynamic is the strength of the U.S. dollar, or namely, the USD strength index (DXY).

Analysts at Decentrader, a platform for cryptocurrency traders, said that the HODLing activity of Bitcoin is increasing, which could offset the thread of the rising dollar in the medium term. He said:

Philip Swift, Bitcoin trader and creator of Lookintobitcoin, meanwhile cautions that the market is reaching overheated levels.

MVRV Z-Score. Source: Twitter @PositiveCrypto

Although the sign of a market top above $40,000 is not necessarily here yet, it is nearing the peak. Swift said:

“We can see that when the z-score enters the red zone it signals a market top. We are not there yet but a few more parabolic days up for price and we will be. I am keeping a close eye on this.”

Swift also explained further in comments to Cointelegraph that while the rally may be getting overheated, a large pullback is becoming unlikely. 

“I think a 30% pullback from here is pretty unlikely,” he said. “I do think the rate we have gone up is getting to the point where btc may need to slow down soon though. Once bitcoin starts ranging then I think alts rip.”

Go to Source
Author: Joseph Young


Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.