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On-chain data suggests Ethereum is in a better long-term growth position than Bitcoin and could thus see gains even after BTC’s rally ends.
Ethereum Exchange Reserve Hasn’t Risen That Significantly Yet
As an analyst in a CryptoQuant post pointed out, investors have been depositing Bitcoin into exchanges recently. The indicator of interest here is the “exchange reserve,” which measures the total amount of a cryptocurrency currently being stored in the wallets of all centralized exchanges.
When the value of this metric declines, it means the given asset is exiting exchanges right now. Generally, when prolonged, this trend can be bullish for the price as it suggests the investors might be accumulating.
On the other hand, the indicator’s value going down implies the holders are depositing their coins to these platforms. As one of the main reasons investors would transfer their holdings to exchanges is for selling purposes, such a trend can prove to be bearish for the cryptocurrency’s price.
Now, here is a chart that shows the trend in the Bitcoin exchange reserve over the last few weeks:
As displayed in the above graph, the Bitcoin exchange reserve went down earlier in the month when the price plunged below the $20,000 level. This suggests that some fresh buying was taking place at these lows.
Since the rally has restarted, however, the indicator’s value has also reversed its trend and sharply increased along with the price. This could signify that holders may be rushing to sell their coins while the profit-taking opportunity remains.
Though, it’s hard to say how many deposits are being made for this purpose, as the indicator used here measures the reserves of spot platforms (which investors use for selling and buying) and the derivative exchanges.
Below is another chart, this time for the Ethereum exchange reserve.
From the chart, it’s apparent that, much like for Bitcoin, the Ethereum exchange reserve plummeted around the recent lows, and the metric has also followed an uptrend during the latest price surge.
However, the pace at which the ETH deposits have taken place is different. BTC’s inflows were rapid, and the total number of coins that flowed in during this surge surpassed the amount taken out during the lows. ETH’s exchange reserve, however, has been slowly growing and is still far from the level seen before the recent lows.
This could suggest that Ethereum is not yet facing selling pressure of the same intensity as Bitcoin. Because of this, the quant thinks that even after the rise in BTC ends, ETH could still be expected to continue to see a strong rise.
At the time of writing, Ethereum is trading around $1,800, up 3% in the last week.
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