One quant explained the differences in whale movement between the Ethereum merger and the time it went live.
Ethereum Funding rates reached an all-time low just before the Merge
As pointed out by an analyst in a CryptoQuant post, a lot of ETH investors bet on the price going down around the merge’s completion.
The relevant indicator here is the “funding rate,” which measures the periodic fee that perpetual futures contract traders exchange between each other.
If this value is positive it indicates that long-term investors pay a premium right now to keep their positions. This trend indicates that bullish sentiments are more prevalent in the market.
Conversely, negative indicators indicate that the shorts outnumber the longs as most feel bearish.
Below is a chart showing how Ethereum funding rates have changed over the past days.
This metric seems to have a very red value less than a decade ago. Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the Ethereum funding rates were falling only days ago and then reached a negative high right before the merger.
According to the quant, this is because the investors believed that PoS Transition hype would already have an impact on the market and they therefore bet short, believing that prices will fall in the wake of that much-anticipated event.
However, just after the merger, the price did see a slight increase. Seeing that the decline they had waited for didn’t come, these short holders quickly started closing up their positions, leading to the funding rates sharply moving up.
The price plummeted as the waiting whales jumped in to dump their Ethereum. Analysts note that it is just a demonstration of whales making moves that make them the biggest gains. “To read those moves, we need to utilize both on-chain data and charts,” says the quant.
At the time of writing, Ethereum’s price floats around $1.4k, down 7% in the last seven days. The crypto’s value has dropped 24% over the last month.
Below is a chart showing the change in coin price over the past five days.
According to TradingView, the value of crypto appears to have fallen in recent days.| Source: ETHUSD on TradingView
Ethereum has been trending down since the merge took place, and right now it’s unclear when the crypto may show some reversal.
Thomas Lipke featured image on Unsplash.com. Charts by TradingView.com. CryptoQuant.com.