Ethereum [$ETH] experienced significant fluctuations after rising above $2,500, hitting a peak of $2,600 before retreating towards $2,400. As of now, it is priced around $2,524, reflecting a daily increase of 2.26% and a weekly rise of 2%.
This decline aligned with the selling activities of large holders, although the broader exchange supply painted a more nuanced picture.
Is Wintermute liquidating Ethereum?
According to Lookonchain, Wintermute transferred 61,847 $ETH, valued at $160.3 million, to Binance and Coinbase. While this move has sparked concerns about selling, depositing on an exchange does not necessarily indicate an immediate sale.
Market makers often shift assets between platforms to facilitate liquidity and optimize operations.
If the transfer was aimed at enhancing liquidity, it might not signify any directional selling.
On the other hand, selling from this inventory could boost short-term supply and lead to increased volatility. The significance of the transfer hinges on its intended purpose.
What’s causing the drop in Ethereum Exchange Supply?
Despite the deposit from Wintermute, there was an ongoing decline in the overall Ethereum Exchange Supply.
AMBCrypto highlighted that Ethereum reserves on Binance hit a three-month low, signaling a broader trend across multiple exchanges as indicated by the Exchange Supply Ratio [ESR].
The ESR has decreased for ten consecutive days, reaching 0.125 at the time of reporting—its lowest level since 2016. This metrics decline indicates that exchanges are holding a smaller portion of Ethereum’s circulating supply.
This suggests that the market is absorbing individual deposits without creating a significant supply of $ETH available for immediate sale.
Historically, a reduced Exchange Supply generally leads to diminished selling pressure. The more pressing question, however, is why $ETH remains weak despite a tightening liquid supply.
Data from SwissIntelligence revealed that 196 whales are selling $ETH, compared to only 125 that are accumulating.
This disparity indicates that ongoing sales by large holders are exerting pressure on $ETH prices while whales capitalize on modest profits.
The True Strength Index has shown a decline since it registered a bearish crossover a few days ago.
Simultaneously, the Balance of Power remains negative, suggesting that sellers maintain a short-term edge in spite of falling exchange balances.
$ETH finds itself in a precarious position, characterized by a shortage of immediately sellable coins and an increase in whale selling.
If this trend persists, $ETH might test the $2,300 level again, especially if Wintermute’s transfer results in market sales. Conversely, a decreased Exchange Supply could enable $ETH to regain the $2,600 mark and aim for $2,800 if demand picks up.
The upcoming shifts in the market may determine whether buyers can absorb whale sales without compromising the emerging supply constraint.
Key Takeaways
- Wintermute transferred 61,847 $ETH, valued at $160.3 million, to Binance and Coinbase.
- The Exchange Supply Ratio for Ethereum has plummeted to levels last seen in 2016, yet Whale distribution continues to undermine price momentum.