Ethereum Price Tied To BitMEX Whales: Quant Uncovers Link
June 26 2024 - 6:00PM
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A quant has pointed out how the trends in the BitMEX exchange
reserve have affected the Ethereum price during the past few years.
BitMEX Ethereum Whales Have Shown Smart Money Behavior In Recent
Years In a CryptoQuant Quicktake post, an analyst discussed a
pattern in the ETH exchange reserve of the BitMEX platform. The
“exchange reserve” here refers to an on-chain metric that keeps
track of the total amount of Ethereum that’s sitting in the wallets
of any given centralized exchange. When the value of this metric
rises, investors will make net deposits to the platform right now.
As one of the main reasons investors transfer to exchanges is for
selling purposes, this trend can have potential bearish
implications for the asset’s price. On the other hand, a decline in
the indicator suggests a net amount of the cryptocurrency’s supply
is moving off the wallets associated with the exchange. Investors
generally take their coins off into self-custody when they plan to
hold for extended periods, so such a trend could be bullish for the
coin. Related Reading: This Historical Ethereum Top Signal Is Yet
To Appear This Cycle Now, here is a chart that shows the trend in
the Ethereum exchange reserve for BitMEX over the last few years:
As is visible in the above graph, the Ethereum exchange reserve on
the BitMEX platform observed a sharp increase back in mid-2022.
This would suggest that the investors had made some hefty net
deposits into the exchange. According to the quant, the platform
houses a significant number of whales, so this large inflow
activity would reflect the behavior of these humongous investors.
Interestingly, the rapid growth in the indicator had come right
before ETH had crashed towards its bear market lows. Thus, it would
appear possible that these large holders had anticipated that
things were about to get worse for the asset, so they had pulled
the trigger on selling while they still had the chance. Another
notable shift in the exchange reserve of BitMEX occurred in
September 2023, when the whales took out a huge amount of Ethereum,
almost completely retracing the earlier bear market increase. From
the chart, it’s apparent that soon after these net outflows
occurred, the cryptocurrency’s price started on a sharp rally that
would eventually take it above the $4,000 level for the first time
since December 2021. Related Reading: Shiba Inu, Solana, &
Cardano Are All Seeing Buy Signal: Analyst It would appear that
these smart money whales were again correct in their intuition
about the market, as they could time their buys just in time for
the rally. Since these net outflows in September, the indicator
hasn’t displayed any significant shifts, as its value has been
moving sideways. Given the historical trend, any new deviations
that crop up could be worth watching out for, as they could
potentially spell another shift for Ethereum. ETH Price Ethereum
showed a recovery push from its lows yesterday, but the run has
calmed down as ETH is still trading around $3,400 today. Featured
image from Dall-E, CryptoQuant.com, chart from TradingView.com
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