Ethereum has seen some relatively strong price action today, with the second-largest cryptocurrency by market capitalization rising in tandem with Bitcoin and virtually all other major altcoins.
In spite of this short-term technical strength, one prominent Bitcoin whale noted in a recent tweet that he believes there is one surprising entity that is stopping ETH from seeing what he describes as an “utter meltdown.”
He notes that this group could be the suspect behind the massive Ethereum buy order and margin longs seen on popular cryptocurrency trading platform Bitfinex.
Bitcoin whale: ETH being artificially supported so that it avoids a “meltdown”
J0E007 – one of the most profitable traders on Bitfinex – spoke about these unusually large buy walls and margin long positions in a recent tweet, explaining that he believes it could be the Ethereum Foundation’s attempt to absorb the extra ETH supply and stop the crypto from seeing a full meltdown.
“I guess growing ETH margin long mega-position on Bfx is how Ethereum Foundation gang absorbs extra ETH supply and prevents ETH price from complete and utter meltdown. I mean, ain’t it crazy.”
He further went on to explain in response to a question about the evidence backing this claim that although it is speculative, it is based primarily on a few key observances:
“It is a guess based on personal observation that ETH margin long volume seems to increase specifically when ETH price experiences downward pressure. Also, ETH margin longs seem to only increase, and almost never decrease, which is quite unusual for such speculative instrument.”
If this is the case, it would be bearish for Ethereum’s long-term outlook, as it casts a shadow over the cryptocurrency’s perceivable fundamental strength that many analysts and investors often reference.
Ethereum sees short-term technical strength as buy orders and margin long positions mount
Ethereum is currently pushing into the $160 region in tandem with Bitcoin’s climb past $7,000, with this movement coming about just days after analysts noted that ETH was facing unusual amounts of buy orders and margin longs on Bitfinex.
Su Zhu – the CEO and founder of Three Arrows Capital – spoke about one of these massive buy walls in a tweet, noting that it had absorbed hundreds of thousands of sold ETH.
“Large ETH buy wall on bfx here, 200k ether filled and another 50k remaining in the order book.”
Traders were also entering into a significant amount of margin long positions concurrently with the formation of this massive buy wall, which further bolstered ETH’s bulls.
One trader named Lowstrife pointed to this phenomenon on Friday, noting that 1.8 percent of Ethereum’s circulating supply was margin long on Bitfinex at the time. He said:
“1.975 million ETH (1.8% of total circulating supply) is now marginlong on Bitfinex. Just Bitfinex. +250k just got filled over the last 4 hours.”
Ethereum, currently ranked #2 by market cap, is up 4.6% over the past 24 hours. ETH has a market cap of $18.06B with a 24 hour volume of $15.02B.
Chart by CryptoCompare
Ethereum is up 4.6% over the past 24 hours.
Cover Photo by Joseph Vary on Unsplash
Posted In: Ethereum, Analysis, Price Watch