Warning Signs? On-Chain Data Shows Bitcoin Momentum Slipping

[Ben Graham]

Bitcoin’s price remains under pressure after retreating from its record high above $124,000 earlier this month. At the time of writing, BTC is trading at $113,146, reflecting a decline of 8.7% from its recent peak, though it has recorded a modest 1.8% daily increase.

The movement highlights ongoing volatility, as investors weigh both on-chain metrics and broader market sentiment to determine whether the bull cycle can regain strength.

Analysts have pointed to a shift in behavior among large traders, particularly on Binance, the world’s largest exchange by volume. According to Arab Chain, a contributor to CryptoQuant’s QuickTake platform, the activity of whales, investors with large holdings, has played a significant role in recent corrections.

His analysis of August trading activity suggests that weakened momentum and renewed selling pressure may explain the inability of Bitcoin to sustain its highs.

Whale Activity on Binance Signals Weakening Momentum

Arab Chain noted that throughout July, Bitcoin fluctuated between $118,000 and $122,000 in what he described as a “trendless” market, with low volatility and limited directional moves.

During this period, inactive deltas, which measure the circulation of older coins, declined, suggesting whales had paused selling or temporarily exited the market. However, by mid-August, the trend reversed as inactive deltas surged, signaling that long-held coins were again being moved and potentially sold.

This activity coincided with Bitcoin’s drop below $112,000, with the Delta indicator remaining near zero, an absence of clear buying pressure. Arab Chain explained that the lack of demand amid increased coin circulation typically results in corrections.

“Large investors are selling again without a strong wave of new buyers emerging to balance the effect. This isn’t the end of the bullish cycle, but the momentum is starting to lose steam,” he said. He added that future price movements may depend on whether new catalysts, such as macroeconomic developments or institutional inflows, can reignite demand.

Bitcoin Exchange Data Highlights Mixed Sentiment

Another CryptoQuant analyst, TraderOasis, examined several metrics to provide further context. He observed that the Coinbase Premium Index, which compares trading activity between US exchanges and global platforms, showed accumulation even as prices fell.

This suggests some investors, possibly institutions, were buying during the dip. However, he flagged caution given that the funding rate remained positive, a sign that traders were still leaning bullish even as prices declined, raising concerns about the risk of a liquidity reset.

TraderOasis also pointed to open interest, or the number of outstanding derivatives contracts, as a key factor. He argued that open interest often acts as support or resistance relative to spot price. Currently, open interest sits above the market price, which could act as resistance unless broken. “If this level is broken, the price will continue to rise,” he noted.

Together, these insights reveal a complex backdrop. While long-term adoption metrics and institutional buying remain supportive, short-term dynamics show cautious sentiment and potential for volatility.

With whales selling, stablecoin inflows rising, and derivatives markets heating up, Bitcoin’s next move will likely depend on whether demand can reassert itself strongly enough to offset recent profit-taking.

Featured image created with DALL-E, Chart from TradingView