Ethereum supply held by major exchanges increases as merger knocks
Ethereum trading volume surpasses Bitcoin trading volume. Will investors follow the “buy the rumour, sell the information” strategy?
By Shashank Bhardwaj
The Ethereum merger is finally happening. Whales, in this situation, transfer their ETH to the exchanges before the deadline. The merger refers to Ethereum’s transition from Proof-of-Work (PoW) consensus to Proof-of-Stake (PoS). Due to this update, the current Ethereum chain will merge with the new Beacon chain. This will be one of the biggest updates to the Ethereum network since its inception. The Ethereum Foundation recently revealed that the merger could happen sooner than expected.
Between September 10 and September 20, the mainnet will be converted to PoS. This will happen after the Bellatrix update. In this scenario, the data shows that the top Ethereum addresses without an exchange have decreased their holdings. It has been reported that Ethereum assets in non-exchange addresses have fallen by 11% over the past three months. At the same time, there was a 78% increase in the number of whale exchange addresses.
It should be noted that Ethereum seems to have outperformed Bitcoin in terms of trading volume several times in August. According to a report,
“Almost every day in August, Ethereum’s transaction volume (%) was higher than Bitcoin’s. was only 31%. The remaining percentage is by trading volume on other altcoins…Ethereum is still very popular and investors are trading the hype.”
Following the announcement of the merger date, Ethereum’s native token, Ether (ETH), experienced a bullish surge in July. Its value hit a new six-month high of over $2,000. It did not consolidate to critical resistance, however. Further research revealed that the gap between Ethereum’s ten largest non-exchange addresses and exchange addresses is closing. As quoted by a report,
“Ethereum has seen its supply held by major exchange addresses increase, which makes sense with traders dumping their holdings on major exchanges during the 2022 slide. Watch for a decline in major exchange address holdings $ETH as a bullish signal.
The rate at which Ethereum is added to exchanges is considered bearish. Traders do this to profit from token sales. It is also possible that the whales believe that the price will drop in the near future. Crypto analyst by the name of Crypto Rover took to his official Twitter account (@rovercrc) to state,
“I think #Ethereum will drop so hard on merge day.
All anticipation is not bought on the spot market but on the futures market.
The Ethereum 2.0 upgrade is one of the biggest events in the crypto industry. Successful completion of phase 2 of the three stages of migration to the PoS system would require the September merger. The Beacon Chain was launched in December 2020 to start the process. The third phase will introduce sharding and other scalability features. It will also significantly reduce the power consumption of the blockchain. The merger is also expected to instill a “buy the rumour, sell the information” approach among traders.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash