How is Ether Exchange Netflow Correlated with Behavioral Pattern of ETH Whales?

How is Ether Exchange Netflow Correlated with Behavioral Pattern of ETH Whales?

Ether Crypto whales are people, just like every other person on earth.

The only difference is that crypto whales have large holdings of certain cryptocurrencies and have the power to more or less manipulate the laws of supply and demand. They can therefore influence the market in whichever direction they choose.

Being human, Crypto Whales have patterns, habits, and motivations for doing their things. More often than not, these patterns and motivations can be tracked by regular crypto community members and used to place one's trades in a way that turns out profitable.

Recently, the Ethereum Netflow chart has been a valuable tool for highlighting the behavior among several Ether whales. Through this chart, it was observed that spikes in exchange flows usually come during times when Ether is trading at long or short-term lows.

This observation has been held for years, and analysts believe they can use this to determine when the next Ethereum pump is bound to happen.

Exchange Inflow Indicator

The Exchange Inflow Indicator, according to CryptoQuant, is an indicator that measures the gross amount of crypto deposited into wallets in all centralized exchanges.

One of the traders at CryptoQuant has also shared some data pointing to how some Ethereum whales have repeatedly been observed depositing their holdings into wallets on centralized exchanges to raise the prices and then dump them when they sell at a higher market price.

According to this data, the Ethereum exchange inflows have confirmed this pattern of behavior among Ethereum whales and have even proven that this has been happening for years.

Chart showing Ether exchange inflow and correlation to price | Source: <a href=";t=sioVYsjaYLkM4VrwRcO6lw"><u>CryptoQuant's data</u></a>
Chart showing Ether exchange inflow and correlation to price | Source: CryptoQuant's data

According to the chart above, the cryptocurrency's price follows whenever the Ethereum exchange inflows spike. Soon after, the whales sell their holdings at increased market prices, and the price of Ethereum corrects itself accordingly.

The Strange Thing about the Ether Exchange Inflows

This newly discovered correlation between exchange inflows and price corrections is also interesting news because increased exchange inflows were initially believed to be a bearish signal. This made sense because the only reason a whale would send their tokens into an exchange was to sell them.

The pattern of whales depositing their tokens into exchanges happened even until the merge in mid-September. Despite the bullish price predictions of several crypto analysts for Ethereum's post-merge price, the price of Ether still dipped massively, falling from a pre-merge high of about $1700 to a low of less than $1300.

This, more than anything, confirms that the pattern highlighted by the Ethereum Exchange Inflow Indicator may be on to something.

Disclaimer: The author's comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR  (do your own research)

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