A number cruncher has pointed out how trends in the BitMEX exchange reserve have affected the Ethereum price in recent years.
BitMEX Ethereum whales have shown smart money behavior in recent years
In a CryptoQuant Quicktake after, an analyst discussed a pattern in the BitMEX platform’s ETH exchange reserve. The “exchange reserve” here refers to an on-chain metric that tracks the total amount of Ethereum held in the wallet of a given centralized exchange.
As the value of this metric increases, investors will now make net deposits into the platform. Since one of the main reasons why investors switch to exchanges is for selling purposes, this trend could have potential bearish implications for the asset’s price.
On the other hand, a drop in the indicator indicates that a net amount of cryptocurrency supply is disappearing from the wallets associated with the exchange. Investors generally self-manage their coins if they plan to hold them for longer periods, so such a trend could be bullish for the coin.
Here is a chart showing the trend in Ethereum exchange reserve for BitMEX over the past few years:
As shown in the chart above, the Ethereum exchange reserve on the BitMEX platform showed a sharp increase in mid-2022. This could indicate that investors had made some significant net deposits into the stock market.
According to the quant, the platform hosts a significant number of whales, so these large inflows would reflect the behavior of these giant investors.
Interestingly, the indicator’s rapid growth occurred just before ETH crashed to its bear market lows. So it seems possible that these big holders anticipated that things were about to get even worse for the asset, and so pulled the trigger on selling while they still had the chance.
Another notable shift in BitMEX’s exchange reserve occurred in September 2023, when the whales took out a huge amount of Ethereum, almost completely following the previous bear market surge.
The chart shows that shortly after this net outflow occurred, the cryptocurrency’s price began a sharp rally that would eventually take it above the $4,000 level for the first time since December 2021.
It appears that these smart money whales were once again correct in their intuition about the market, as they were able to time their purchases just in time for the rally.
Since this net outflow in September, the indicator has not shown any significant shifts as its value moves sideways. Given the historical trend, any new anomalies could be worth paying attention to as they could potentially signal a new shift for Ethereum.
ETH price
Ethereum staged a recovery from its lows yesterday, but the run has calmed down as ETH is still trading around $3,400 today.
