BitMine Buys $199M in Ether as Smart Money Bets on $3K ETH Decline
BitMine acquires $199M in Ether while smart money traders short ETH. Analysts highlight corporate accumulation and weak ETF demand shaping..
Quick overview
- BitMine Immersion Technologies has significantly increased its Ether holdings, spending $199 million recently to reach a total of $11.3 billion in Ether.
- Despite a general decline in corporate crypto buying, BitMine's strategic accumulation stands out, as it purchased 679,000 ETH worth $2.13 billion during a period of reduced digital asset treasury activity.
- While BitMine aims for long-term growth, many professional traders are betting on a short-term price drop, with smart money holding a net short position of $21 million in Ether.
- Weak demand for Ether ETFs and cautious trading conditions suggest potential volatility ahead, despite BitMine's continued buying supporting ETH's price.
BitMine Immersion Technologies, the largest corporate Ether holder, has been quietly increasing its stake in the crypto over the past couple of days. Having forked out a whopping $199 million on Ether in that time – $130.7 million of that was stumped down on Friday and $68 million on Saturday, according to some blockchain data called Lookonchain.
This means the company now holds a massive $11.3 billion in Ether, which works out to 3.08% of the total ETH supply, leaving it well on its way to its 5% target, according to other data from StrategicEthReserve. BitMines also has $882 million in cash reserves, ready to splash out on more.
The reason this is a big deal is this thing called strategic accumulation, where BitMine is buying up Ether despite the corporate buying of crypto slowing dramatically. Digital asset treasury (DAT) activity – that’s where companies pick up Ether – actually dropped by 81% over three months, from 1.97 million ETH in August to just 370,000 in November.
But BitMine was a notable exception, buying up 679,000 ETH worth $2.13 billion during that time, which was basically all of the corporate inflows.
Smart Money Expecting A Crash
While BitMine is looking to make a long-term gain, the “smart money” crowd is hedging its bets on a short-term price drop, betting that Ether will go down, not up.
According to Nansen data, some top-performing traders increased their short positions in Ether by $2.8 million over the last 24 hours.
In all, smart money now has a net short position of $21 million in Ether, which is basically a vote of no confidence in any price gains.
This highlights the starkly opposing strategies pursued by large corporate holders and professional crypto traders: the former seeking long-term growth, the latter trying to make some short-term cash.
Weak ETF Demand, Pressure Mounting
Other signs suggest Ether may face short-term struggles. Spot Ether ETFs saw $75.2 million in net outflows on Friday, which is for the second day running. They’ve been seeing a lot of money going out in the last couple of months, too, $1.4 billion in November alone, according to some data from Farside Investors.
The combination of weak ETF demand and a trading environment that’s pretty cautious means that Ether’s facing a bit of a mixed bag right now:
- Institutional buying of Ether remains strong
- Short-term traders think the price is going to pull back
- ETF liquidity is contracting fast
Ether is currently trading at $3,046. It’s got some support above $3,000, but is still facing significant pressure from short-term market forces. Analysts reckon that BitMine’s continued buying is what keeps ETH’s price up, even as smart money traders and ETF outflows add to volatility.
BitMine’s strategy of just going in and buying up Ether shows they really believe in the crypto’s long-term potential. But the short-term market dynamics also suggest volatility is in the cards for the coming weeks.
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