Quant Explains How Whales Moved Before And After Ethereum Merge

Keshav Verma

2 years ago

3 mins read

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A quant has explained how the movement of whales differed between before and after the Ethereum merge 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.

When the value of this metric is positive, it means long investors are paying a premium to the short holders right now to hold onto their positions. Such a trend shows a bullish sentiment is more dominant in the market currently.

On the other hand, negative values of the indicator suggest shorts are overwhelming the longs at the moment as the majority are feeling bearish.

Now, here is a chart that shows the trend in the Ethereum funding rates over the last few days:

Looks like the metric had a deep red value not too long ago | Source: CryptoQuant

As you can see in the above graph, the Ethereum funding rates had been going down only a couple of days back, and reached a new negative peak right as the merge arrived.

The quant explains that this was because investors thought the PoS transition hype had already impacted the market, and so they bet on short positions, believing that the price would go down during the aftermath of the much anticipated event.

But just following the merge, the price actually rather saw a slight improvement. 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.

Right as this happened, the whales who had been waiting jumped in and dumped their ETH, causing the price to plunge down hard. The analyst notes that this is a display of whales trying to make a move in such a way that nets them the largest gains. “To read those moves, we need to utilize both on-chain data and charts,” says the quant.

ETH Price

At the time of writing, Ethereum’s price floats around $1.4k, down 7% in the last seven days. Over the past month, the crypto has lost 24% in value.

The below chart shows the trend in the price of the coin over the last five days.

The value of the crypto seems to have been going down during the last few 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.

Featured image from Thomas Lipke on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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