Ethereum deposits on exchanges have exceeded its previous high in December 2018
Ethereum’s total exchange deposits have increased to 14.5 million across all major cryptocurrency platforms, suggesting that ETH is likely to be sent to exchanges that will be sold. Specifically, Ethereum deposits on exchanges exceeded previous highs in December 2018, when ETH prices fell to as low as $ 89.
— ViewBase (@viewbasecom) March 20, 2020
With these Ethereum deposits, ETH is likely being sent to trading platforms to be sold
Exchanged deposits often show that investors are turning to sell their assets, and withdrawing or withdrawing money shows that investors hold cryptocurrency assets for a long time. The increase in trading deposits proves that in the context of growing fear of the Coronavirus pandemic, investors are hedging their portfolios in case of the next downtrend.
Since the second week of March, the price of Ethereum and other significant crypto assets like Bitcoin has had a strong correlation with the U.S. stock market.
The drop-off in the equities market, increasing triggered by declining appetite towards high-risk assets, has led to a steep sell-off in the crypto market as well.
Analysts like Placeholder VC Chris Burniske said:
“Bitcoin price seems to be unable to see its bottom, for many technical reasons. Until the stock sees the bottom, demand for cryptocurrency assets, mainly from institutions, is expected to dwindle.”
1/ Lots of people asking where $BTC bottoms. The short of it is I wouldn’t be surprised to see a retest of our 2018 lows near $3000. To explain:
— Chris Burniske (@cburniske) March 16, 2020
ETH price has seen a significant correction in the past month
Despite the exponential growth of the decentralized financial market (DeFi) and the rapid expansion of companies like BlockFi and Dharma, the price of Ethereum has seen significant adjustments in the past month.
When the ETH price fell below $ 200, it triggered a large amount of liquidation on DeFi platforms, bringing the total number of ETH used as collateral on the DeFi platform nearly halved.
Because DeFi platforms use ETH as collateral for loans, when ETH price drops significantly, borrowers are required to add more ETH to maintain their investments.
At this point, for the cryptocurrency market, technical factors seem to take precedence over the fundamentals; While Ethereum’s ecosystem, which has witnessed consistent growth since the beginning of 2019, ETH has yet to surpass the cryptocurrency market.
With analysts predicting that the cryptocurrency market will set a new bottom soon, exchange data shows that a large number of investors are selling ETH for fear of market uncertainty.
Why do record high deposits often coincide with bottoms?
Cryptocurrency markets, similar to traditional financial markets, tend to bottom out when the market sees the highest level of investor fear.
In December 2018, Ethereum bottomed out when the amount of deposits in exchanges reached 14 million ETH. After a large amount of ETH was sold and the price dropped to nearly $ 80, ETH began to recover.
Similarly, when Bitcoin price dropped to as low as $ 3,150 two years ago, it witnessed a spike in demand and volume on significant exchanges, causing reaction and a long recovery.
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