Whales sell off ETH in large quantities, earning millions

Source: LongHash

Data from crypto market research team Santiment shows that large investors sold a large amount of ETH in their hands before and after the crash on March 8.

In just 48 hours, the price of ETH dropped from a high of $252 on Bitmex to around $190 — a 25% drop in a short period of time.

The sudden drop in ether prices has led to hundreds of millions of dollars in futures liquidations. According to Datamish, on March 8, $185 million worth of long contracts were liquidated on Bitcoin perpetual futures contracts on BitMEX alone.

Exchange inflows show large investors moving ETH

Analysts at Santiment said that based on a deep dive into ETH’s largest addresses, large holders — investors who hold large amounts of cryptocurrencies — moved their ETH from their wallets to exchanges around the same time ETH began to plummet.

The research team stated:

“To gain a deeper understanding of the current movements of large investors in the cryptocurrency market, we analyzed the recent operations of large addresses of ETH and Chainlink. In the case of ETH, large investors were moving their inventory to exchanges before and after the market crash.”

A large portion of the daily trading volume in the crypto market comes from futures and leveraged trading platforms, the latter of which offers high leverage of up to 125 times. Therefore, the short-term price trends of large and small cryptocurrencies, including Bitcoin and Ethereum, are largely influenced by the operations of large investors.

In a highly leveraged environment, a single sell order worth tens of millions of dollars can be enough to crash the price of a large-cap cryptocurrency overnight.

But such orders can bring lucrative profits to the seller. The research team said, "In fact, we have tracked down an ETH address that has made a net profit of approximately $2.58 million (a return on investment of 59.72%)."

On March 5, Santiment reported that the top 100 ETH holders were hoarding the cryptocurrency. As Santiment noted at the time, such buying behavior usually suggests bullish sentiment. But this time, given the aggressive sell-off that followed, it may actually be just an attempt by large holders to drive up the price of the cryptocurrency in order to maximize their profits before the expected bear market.

Volume proves the uncertainty of the rally

As the market rebounds, trading volume in the Chicago Mercantile Exchange (CME) Bitcoin futures market has exceeded $400 million for the first time since late February. As data from Skew.com shows, the surge in trading volume in the CME Bitcoin futures market coincided with the ETH crash.

When market volume fails to move in tandem with Bitcoin price action, it means that the current trend may just be a false move before the true direction is established.

For example, in the first week of March, the price of Bitcoin climbed steadily to over $9,000, but trading volume was relatively low. After two days of short-term stability, the price of Bitcoin suddenly plummeted to $7,600, a drop of 17%.

The high volume seen in the CME Bitcoin futures market amid severe selling pressure across the crypto market indicates the sheer strength of the downtrend.

In short-term downtrends, alternative cryptocurrencies such as ETH tend to underperform against Bitcoin. This perception may be what is driving ETH owners to sell in anticipation of a sharp correction.

LongHash, understand blockchain with data.