Ethereum
Ethereum Price Tied To BitMEX Whales: Quant Uncovers Link
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.
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.
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.
The US Securities and Exchange Commission (SEC) has intensified its legal battle with the crypto industry by filing a lawsuit against ConsenSys, a blockchain firm known for its MetaMask wallet product and its focus on the Ethereum network.
The SEC alleges that ConsenSys violated federal securities laws by operating as an unregistered broker and dealer while offering services for “crypto securities,” amassing fees exceeding $250 million.
SEC Lawsuit Against ConsenSys
The SEC’s lawsuit against ConsenSys echoes similar complaints against other crypto firms such as Coinbase and Kraken. However, what sets this lawsuit apart is the context surrounding ConsenSys’ response to the SEC’s actions.
In April, ConsenSys filed a lawsuit against the SEC after receiving a Wells notice seeking clarity on whether Ethereum should be classified as a security. Just recently, ConsenSys announced the closure of the SEC’s “Ethereum 2.0” investigation, interpreting it as an indication that Ethereum fell outside the agency’s jurisdiction.
Notably, the SEC did not name Ethereum as one of the unregistered securities offered by ConsenSys in Friday’s filing, which may have led to the approval of the Ethereum ETF applications by the world’s largest asset managers on May 23.
Crypto Industry’s Regulatory Battle
ConsenSys, founded by Joseph Lubin, one of Ethereum’s developers, distinguishes itself from previous SEC targets. Rather than operating as an exchange, ConsenSys focuses on software development, including the MetaMask digital wallet.
The SEC’s lawsuit argues that the firm violated securities laws by enabling the “swapping” of crypto assets through MetaMask. Particularly, the agency has targeted Ethereum staking services, namely Lido and Rocket Pool, alleging that their tokens, stETH and rETH, respectively, are unregistered securities.
The SEC further claims that ConsenSys facilitated over 36 million crypto asset transactions, including at least 5 million involving what the agency deems to be securities.
Previously, the SEC had brought similar charges related to staking against Kraken, resulting in a $30 million settlement, while Coinbase has contested the charges.
While the new SEC complaint against the blockchain firm does not classify Ethereum as a security, it represents another front in the SEC’s ongoing campaign against major players in the crypto industry.
Many within the crypto community may view this as a partial victory, given the absence of Ethereum’s inclusion as an unregistered security. However, the lawsuit further highlights the regulatory uncertainties surrounding the industry’s top companies.
ConsenSys, currently engaged in an ongoing lawsuit against the SEC in Texas, criticized the agency’s actions, accusing it of pursuing an “anti-crypto agenda” through arbitrary enforcement actions and regulatory overreach.
At the time of writing, ETH was trading at $3,777, down 2.3% in the past 24 hours as the crypto market continues to experience significant selling pressure.
Featured image from DALL-E, chart from TradingView.com
Despite Ethereum’s recent lackluster performance, Glassnode Co-founders, under the name ‘Negentrophic’ on Elon Musk’s X social platform, assert that ETH’s potential has yet to be fully realized.
Analyzing historical data and market patterns similar to those in early 2021, Negentrophic predicts that Ethereum could reach a high of $7,500, a forecast based on current market structures and technical indicators such as the 161.8 Fibonacci extension level.
Diving Into The $7,500 Prediction
Assessing the prediction from these experts, a Fibonacci extension level seen in 2021, which signaled a major rise for Ethereum, seems to have now emerged on the ETH chart, suggesting that history might indeed repeat itself.
The technical analysis shows a developing bull flag pattern on Ethereum’s chart, which typically indicates the continuation of a bullish trend.
Ethereum could be primed for a substantial price increase if this pattern holds, especially considering the increased market interest and forthcoming ETH spot ETF trading.
For Ethereum to achieve the anticipated $7,500 price target, it must first overcome several significant resistance levels. The initial major hurdle is the $4,000 mark, aligned with the 1.618 Fibonacci extension from the previous cycle.
Surpassing this level would confirm the bullish market structure and pave the way for reaching higher price targets. Negentrophic particularly noted on X:
We believe Market moves in structures. And this structure gives us a target at ~7500 as a Final High for ETH. That is the 161.8% Fib-extensions from the structure, we currently see developing. That would mirror the Fib-extension we saw back in 2021. And it would also imply a strong rally in ETH to set in …. soon!
Ethereum Signs of Recovery
Meanwhile, In the current market environment, ETH has shown signs of recovery, rising from lows below $3,300 to around $3,483. However, the road to recovery is still fraught with challenges, as indicated by a slight downtrend in its weekly performance.
Market experts like Quinn Thompson of Lekker Capital have echoed similar bullish sentiments for Ethereum, suggesting a potential rise to $7,000 by the upcoming US election in November.
This projection aligns with a broader optimism in the crypto community, where the mood has shifted from overwhelmingly bearish to cautiously optimistic about a significant surge for major cryptocurrencies.
Title: We are amidst one of the most obvious and attractive crypto buying opportunities of recent memory.
Subtitle: While the market has completely reset, the structurally positive election, liquidity and crypto momentum cycles remain intact.
Body: In all of my 5 years in…
— Quinn Thompson (@qthomp) June 26, 2024
Featured image created with DALL-E, Chart from TradingView
Crypto trader Duncan has explained why he is “extremely long” on Ethereum (ETH) despite the crypto token’s recent drop to around $3,400. He emphasized the Spot Ethereum ETFs, which he believes could spark a significant rally for ETH.
A ‘Significant Upside Repricing’ Could Be On The Horizon ForTHEEthereum
Duncan mentioned in an X (formerly Twitter) post that he believes that the market is way too bearish at the moment and that there could be a “significant upside repricing” for Ethereum if the Spot Ethereum ETF inflows are “anything but horrible.” He further explained why he thinks the Spot Ethereum ETFs will be a huge success, contrary to what some might think.
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First, he noted that asset managers view the crypto ETF space as a “new frontier” that could generate billions in management fees for them over the next ten years. He highlighted how BlackRock has had its most successful product launch ever with its Spot Bitcoin ETF, which he claims is already generating $45 million in fees yearly, just six months after its launch.
Based on this, Duncan stated that the Spot Ethereum ETFs provide these asset managers another “massive opportunity” to launch a product that could bring them similar success to the Spot Bitcoin ETFs, generating hundreds of millions in fees. Duncan remarked that the Spot Ethereum ETFs are “almost as big as the Bitcoin ETF given the base management fees and the future ability to clip a fee off the staking yield.”
Duncan further alluded to an interview Scott Melker (aka Wolf Of All Streets) had with VanEck’s Head of Digital Asset Research, Matthew Sigel, to emphasize how these asset managers feel about the Spot Ethereum ETFs. From what was said during the interview, Duncan noted how VanEck is betting on the Spot Ethereum ETFs to spark a “reflexive rally” in ETH, which Sigel claimed could make them more money.
Spot Ethereum ETF Issuers Could Provide A Narrative For ETH
Duncan tried to counter the argument made by crypto figures like Andrew Kang, who argued that Ethereum had no narrative and that the Spot Ethereum ETFs might not succeed because of that. Duncan stated that asset managers like BlackRock and VanEck can “literally start the narratives themselves.”
He added that this narrative could be about BlackRock’s Real World Assets (RWA) on-chain, VanEck’s new stablecoin, or the asset managers’ “open app store” thesis. Dunan said the market could witness a “massive ETH rally” when these narratives are mixed with some “good flows and ETH’s extremely reflexive characteristics.”
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The crypto trader admitted that this could take time but opined that it is naive to think that these asset managers won’t deploy significant resources to attract inflows to their Spot Ethereum ETFs.
Crypto analyst and trader Tyler Durden shared a similar sentiment when he mentioned that Ethereum reaching $10,000 was the “most asymmetric bet” in crypto today. He claimed that Wall Street had put so much effort into ensuring that the Spot Ethereum ETFs were approved, and now, they will make as much money from it while pumping ETH.
Featured image created with Dall.E, chart from Tradingview.com
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