Ethereum looks more attractive to crypto traders than Bitcoin in the current recovery
- According to the recent trend of exchange reserve, ETH reserves are dropping faster than Bitcoin, likely to continue ahead of the London Hardfork.
- Frequent Binance Smartchain rug pulls, and lower gas fees have increased popularity and demand for Ethereum among traders.
- BTC short open interest persists, the Bitcoin bear market is not over until the shorts are purged.
Ethereum's London Hardfork is approaching, and ETH is leaving exchange wallets faster than Bitcoin. Bitcoin price is recovering from the drop; however, the persistent GBTC discount suggests a shortage of demand.
Ethereum reserves continue dropping ahead of the London Hardfork
The amount of Ethereum held in all exchanges' wallets indicates the ETH supply available for selling, purchasing, and margin trading. The metric has continued its downward slide that started on June 26 at 20.8 million ETH. As of July 26, the reserves are at 19.7 million.
The dropping reserve is currently a bullish development for the top altcoin since the value of ETH staked in the ETH2 staking contract now stands at 6.4 million. Ethereum leaving exchanges is being staked or stored in private wallets. This signals possible bullish sentiment of traders ahead of the implementation of the Ethereum improvement proposal (EIP) 1559 protocol in the London Hardfork.
Ethereum all exchange reserves
There is an increasing interest and demand for Ethereum as rug pulls become more frequent on the Binance Smart Chain (BSC). Earlier in July, the number of unique addresses on BSC reached a new all-time high of over 83 million; the previous significant increase coincided with ETH gas fees recording new highs.
BSC has suffered over nine exploits in 2021 that accounted for over $370 million in losses. In 2020, the attacks in their entirety cost a staggering $154 million to users on the network. Frequent attacks have emerged as a factor driving several developers and users away from BSC network projects and toward Ethereum.
The volume of Ethereum staked in the ETH2 contract has increased alongside the increasing frequency of these attacks. The increase in trader interest in the altcoin has made it more attractive than Bitcoin in the current recovery. Though Bitcoin is trading above the $38,000 level, there is still open interest in Bitcoin shorts that have not yet been purged.
A combination of the open interest in BTC shorts and negative funding rates signals that traders have a bearish outlook. Willy Woo, an independent Bitcoin analyst, recently tweeted
Shorts not out of trouble yet, lol.
— Willy Woo (@woonomic) July 26, 2021
(Still a lot of short open interest to purge)
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
