While Ethereum appears to have embarked on a major rally of its own, the asset has recently experienced significant activity on the Deribit options exchange, which begs the question of what this means for the price of ETH.
CryptoQuant analyst known as Amr Taha detailed these changes in a post on the CryptoQuant QuickTake platform. The analysis focused on significant outflows from the stock market to frosty wallets, highlighting the potential implications for market sentiment and liquidity.
ETH network flows on derivatives and implications
According to Taha, options exchange Deribit recorded a notable transaction involving 233,000 ETH transferred to a frosty wallet. The transaction, valued at approximately $783 million, was completed at an average price of $3,350 per Ethereum.
This wasn’t narrow to Ethereum itself – Bitcoin also witnessed a similar outflow, with 31,000 BTC worth $3.038 billion moved into frosty storage. These transfers have sparked speculation about the motives behind such activity and their potential impact on the broader market.
As a result, the CryptoQuant analyst highlighted four main implications of this move. Firstly, there is a noticeable reduction in selling pressure. Assets stored in frosty wallets are less likely to be sold immediately, which can reduce liquidity on stock exchanges.
Taha noted that this scenario could contribute to price stability or even further strengthen the market’s upward trend if demand remains stable or increases.
Another key takeaway from these transactions is the possibility of institutional accumulation. Such large-scale transfers often indicate that institutional investors or wealthy individuals are confident in Ethereum’s long-term value.
Additionally, Taha highlighted Deribit’s strategy of moving these funds as part of its risk management approach. Analyst wrote:
Moving assets into frosty storage is a security practice intended to minimize exposure to the risk of intrusion. It also reflects a cautious approach, possibly due to regulatory scrutiny or anticipated market volatility.
Additionally, Taha stressed that the move could also have an impact on market sentiment, where investors may interpret these trades as bullish, “leading to increased purchasing activity.”
Ethereum market performance
Meanwhile, Ethereum is currently trading above the $3,300 level after rising 8.2% in the last week and 1.3% in the last 24 hours. The asset’s market capitalization has also increased significantly along with its price, with its current valuation approaching $400 billion.
According to a renowned cryptocurrency analyst known as EᴛʜᴇʀNᴀꜱʏᴏɴᴀL on X, Ethereum’s current price chart appears to mirror that of 2016-2017, which saw a “mega bull” rally.
According to the analyst, “altcoins will follow” Ethereum’s continued growth.
#Ethereum 10 thousand $+ step by step!$ETH repeats the bullish megaphone pattern it has drawn towards the 2016-2017 megabull period, ahead of the 2024-2025 megabull period.#Alts I will follow! pic.twitter.com/VRVI8lwnsS
— EᴛʜᴇʀNᴀꜱʏᴏɴᴀL
(@EtherNasyonaL) November 22, 2024
Featured image created with DALL-E, chart from TradingView
