A quant pointed out how trends in the BitMEX exchange reserve have affected the price of ethereum over the past few years.
BitMEX ethereum Whales Have Shown Smart Monetary Behavior in Recent Years
In a quick take from CryptoQuant ethereum-reserves” target=”_blank”>mail, an analyst analyzed a pattern in the eth exchange reserve of the BitMEX platform. “Exchange reserve” here refers to an on-chain metric that tracks the total amount of ethereum held in the wallets of any given centralized exchange.
When the value of this metric increases, investors will make net deposits on the platform right now. As one of the main reasons investors move to stock exchanges is for selling purposes, this trend may have potential bearish implications for the asset's price.
On the other hand, a decline in the indicator suggests that a net amount of the cryptocurrency's supply is leaving the wallets associated with the exchange. Investors typically put their coins into self-custody when they plan to hold them for long periods, so that trend could be bullish for the coin.
Now, here is a chart showing the trend in ethereum exchange reserve for BitMEX over the past few years:
<img src="https://technicalterrence.com/wp-content/uploads/2024/06/Ethereum-Price-Linked-to-BitMEX-Whales-Quant-Discovers-Link.png" alt="ethereum Exchange Reserve ” />
As can be seen in the chart above, the ethereum exchange reserve on the BitMEX platform saw a sharp increase in mid-2022. This would suggest that investors had made significant net deposits to the exchange.
According to the quant, the platform hosts a significant number of whales, so this large entry activity would reflect the behavior of these huge investors.
Interestingly, the indicator's rapid growth occurred just before eth plummeted towards its bear market lows. Therefore, it seems possible that these large holders had anticipated that things were about to get worse for the asset, so they had pulled the trigger to sell it while they still had the chance.
Another notable change in BitMEX’s currency reserve occurred in September 2023, when whales took out a massive amount of ethereum, almost completely reversing the previous bear market surge.
It is clear from the chart that shortly after these net outflows occurred, the price of the cryptocurrency began a strong rally that would eventually take it above the $4,000 level for the first time since December 2021.
It would seem that these smart money whales were once again right in their intuition about the market, as they were able to time their purchases just in time for the rally.
Since these net outflows in September, the indicator has not shown any significant changes, as its value has moved sideways. Given the historical trend, it is worth keeping an eye on any new deviation that emerges, as it could mean another turnaround for ethereum.
eth Price
ethereum showed recovery momentum from its lows yesterday, but the run has calmed down as eth is still trading around $3,400 today.
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