Bitcoin-to-Ethereum swaps rise amid surging risk appetite – What now?

After attempting a breakout days ago, Ethereum faced a rejection at $3.4k and dropped to a local low of $3045. 

As of this writing, Ethereum [ETH] traded at $3,118 after a slight 0.03% hike on the daily charts and a 2.5% hike on the weekly charts. Amid this market pullback, investors took the opportunity to accumulate at a discount. 

Whale rotates, swaps 1969 BTC for 58.149 ETH

With crypto in a prolonged downtrend, significant capital has rotated away from Bitcoin to other crypto assets. 

In fact, the capital moved into Bitcoin [BTC] has dropped from the July peaks of $62 billion to only $4 billion.

Amid this shift, Ethereum is the biggest beneficiary with investors, especially whales, selling BTC and accumulating ETH. 

On-chain monitors observed one such whale. According to Lookonchain, a whale swapped another 502.8 BTC for 14,500 ETH, worth approximately $45.24 million. 

This whale has been aggressively swapping BTC for ETH over the past days. As a result, the whale has converted 1,969 BTC, worth $177.9 million, into 58,149 ETH, worth $181.4 million. 

When whales rotate from BTC to ETH, it signals a high risk appetite, indicating they are willing to take on more risk for higher future returns.

Such market behavior indicates confidence in ETH and a projected strengthening of narratives.

Demand for ETH recovers

With Ethereum seeing a shift in market sentiment, the demand for the altcoin has surged significantly.

Inasmuch, Ethereum’s Fund Market Premium has held positive for two consecutive days, for the first time in almost two weeks.

Usually, when the market premium holds positive, it suggests that investors have turned to aggressive accumulation of ETH through funds.

Thus, buyers are willing to pay more than the actual value of ETH, a clear sign of institutional-style bullishness.

As a result of this aggressive accumulation, Ethereum’s Exchange Netflow has remained negative for five consecutive days.

In fact, at press time, the altcoin’s Netflow was -32k ETH, indicating withdrawals rather than deposits, a clear sign of aggressive spot accumulation.

Historically, higher exchange outflows have accelerated upward momentum by raising scarcity, often a prelude to higher prices.

Is demand adequate to sustain a rebound?

While demand for ETH from whales and funds has recovered, the market remains structurally bearish. As a result, demand has become inadequate to address the market gap.

In fact, Ethereum’s downward momentum has continued to strengthen. The Directional Movement Index (DMI) dipped into oversold territory, entering a negative zone at -3, indicating bearish dominance.

Such market conditions leave ETH in a bearish position and could lead to further losses. The continuation of these market conditions could see ETH lose $3k support and drop to $2.8k.

However, if buyers hold the accumulation spree, ETH could close above EMA20 at $3121 and target $EMA50 at $3288, signaling a trend shift.