Whale “sells off” Ethereum when ETH drops below $4,000 – Is this a negative scenario?

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2021-12-30 04:22:11

Ethereum (ETH) is having a hard time retaining its richest investors as it loses its support at $4,000.

Whale Sells Ethereum As ETH Drops Below $4,000 – Is This a Negative Scenario?

Data from Glassnode reveals that the number of Ethereum addresses holding at least 1,000 ETH dropped to 6,292 on December 27, the lowest level since April 2017. The highest level to date. current this year is 7,239 recorded in January.

Number of Ethereum addresses with a balance of at least 1,000 ETH.  Source: Glassnode
Number of Ethereum addresses with a balance of at least 1,000 ETH. Source: Glassnode

On-chain analysts often observe the distribution of ETH between addresses to realize the degree of correlation between retail and institutional investors. They consider wallets holding over 1,000 ETH (about $3.92 million at today’s rates) as whales, primarily because of their ability to influence temporary market trends through large buy or sell orders.

A larger indicator is also reflecting the ongoing selling trend among the richest Ethereum wallet holders. The number of Ethereum wallets holding at least 10,000 ETH (or around $39.20 million) has dropped slightly, from 1,208 in June to 1,156, marking a drop of nearly 4.5%.

Number of Ethereum addresses with a balance of at least 10,000 ETH.  Source: Glassnode
Number of Ethereum addresses with a balance of at least 10,000 ETH. Source: Glassnode

Unlike whales, smaller ETH wallets have been at the forefront of Ether’s 2021 bull run. The number of retail investors accumulating Ethereum spiked when ETH broke through $4,000. As of earlier this week, Ethereum addresses with non-zero ETH balances have hit an all-time high of over 71.23 million, up 20.31 million from 10.66 million at the start of the year.

The number of Ethereum addresses with a balance of at least 0.1 ETH.  Source: Glassnode
The number of Ethereum addresses with a balance of at least 0.1 ETH. Source: Glassnode

While the element of selling pressure from whales could weigh heavily on ETH’s temporary price reaction, it is not yet certain in terms of the platform’s longer-term development. Maybe this is just the general psychological situation of the market before the correction from the “big brother” Bitcoin.

In terms of deflation, Ether is doing a great job. At press time, there has been as much as 1,289 million ETH discarded by burning, equivalent to nearly 5 billion USD, since the implementation of the EIP-1559 upgrade about four months ago.

Amount of ETH burned since August via EIP-1559.  Source: Ultrasoundmoney
Amount of ETH burned since August via EIP-1559. Source: Ultrasoundmoney

This will help ETH become increasingly scarce, and as the demand to buy Ether to use every application utility in the DeFi space increases, the price of ETH will definitely benefit. It should be noted that the Ethereum ecosystem is accounting for more than 60% of the total value locked (TVL) in DeFi at $155.77 billion.

Total Value Locked (TVL) in DeFi.  Source: Defillama
Total Value Locked (TVL) in DeFi. Source: Defillama

Besides, Ether is gradually proving its hegemonic position over the world’s largest traditional investment organization. The “difficult” boss of the world’s largest hedge fund Ray Dalio revealed to have invested in ETH. Many experts also agree with the view that Ethereum will outperform Bitcoin because of technology, not inflation.

Finally, the biggest barrier mentioned frequently by the community is gas fees. However, that will soon be resolved with the efforts of the development team towards Ethereum 2.0 with the heart Beacon Chain in 2022.

Layer 2 protocols are also strongly supporting ETH to reduce fees, combined with the largest security platform on Ethereum Tornado Cash is about to launch a new upgrade. This proves that all are defending and supporting ETH’s great goal in the future.

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