The Whale Alert transaction tracker bot blew up earlier today after over 1.25 million Ethereum were transferred from a “unknown wallet” to the Kraken centralized exchange. Here’s what’s going on behind the scenes.
The transaction page shows that $6 billion in Ethereum has been transferred from the anonymous wallet. However, according to the Etherescan blockchain explorer, all funds have been transferred from the Kraken cold wallet.
The high volume can be attributed to rising fund inflows, which have been present since the beginning of September. Users continue to withdraw funds from exchanges as a result of the market’s strong bullish trend and Ethereum’s deflationary path.
— Whale Alert (@whale_alert) November 15, 2021
To ensure adequate liquidity, the exchange will inject funds to be used by market makers. The tracked sum is roughly 40% of the current daily trading volume, implying that if these funds are used for selling, Ethereum’s price is more likely to fall significantly.
Cold wallets are used by exchanges to securely store users’ assets without putting them at risk of being hacked or stolen. Some of the funds remain in the exchange’s hot wallets, ready to be used on demand. Cold wallets offer greater security in exchange for the inability to access funds immediately because they are stored on a device that is not always connected to the network.