A quant has pointed out how the trends in the BitMEX exchange reserve have affected the Ethereum price during the past few 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.

Ethereum showed a recovery push from its lows yesterday, but the run has calmed down as ETH is still trading around $3,400 today.

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