Why Ethereum is Experiencing Gains Even After BTC Rally Ends?
Exploring the reasons behind Ethereum’s continuous growth despite the Bitcoin rally ends
Ethereum is in a better long-term growth position than Bitcoin and may see gains even after the BTC rally ends. Investors have recently deposited Bitcoin into exchanges. The “exchange reserve,” which measures the total amount of a cryptocurrency currently stored in the wallets of all centralized exchanges, is the indicator of interest here.
When the value of this metric falls, it indicates that the given asset is currently being traded.
In general, if this trend continues, it can be bullish for the price because it indicates that investors are accumulating. The indicator’s value falling, on the other hand, indicates that holders are depositing their coins on these platforms. Because one of the main reasons investors transfer their holdings to exchanges is to sell them, such a trend can be detrimental to the cryptocurrency price. The Bitcoin exchange reserve fell earlier this month when the price fell below US$20,000.
However, since the rally resumed, the indicator’s value has reversed its trend and has sharply increased along with the price. This could indicate that holders are rushing to sell their coins while the profit-taking opportunity is still available.
However, it is difficult to say how many deposits are made for this purpose because the indicator used here measures the reserves of spot platforms (which investors use for selling and buying) and derivative exchanges.
The Ethereum exchange reserve fell around the recent lows, and the metric has also followed an uptrend during the recent price surge. However, the rate at which ETH deposits have occurred differs. The inflows of BTC were rapid, and the total number of coins received during this surge exceeded the amount taken out during the lows.
However, ETH’s exchange reserve has been slowly increasing and remains far below the level seen before the recent lows. This could imply that Ethereum is not yet under as much selling pressure as Bitcoin. As a result, the quant believes that even after the rise in BTC is over, ETH will continue to rise strongly. Ethereum is currently trading around US$1,800, up 3% in the last week.