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While the price of Ethereum sails to new highs, whales are dumping and the remaining HODLers are moving funds out of exchanges, presumably to offline wallets or to earn yields from decentralized finance protocols.
Approximately $560 million in Ethereum left crypto exchanges yesterday, according to on-chain analytics by Glassnode, sending the amount of ETH held on exchanges to a 19-month-low.
📊 Daily On-Chain Exchange Flow#Bitcoin $BTC
➡️ $1.6B in
⬅️ $1.5B out
📈 Net flow: +$83.7M#Ethereum $ETH
➡️ $926.3M in
⬅️ $1.5B out
📉 Net flow: -$560.7M#Tether (ERC20) $USDT
➡️ $660.0M in
⬅️ $740.0M out
📉 Net flow: -$80.1Mhttps://t.co/dk2HbGwhVw— glassnode alerts (@glassnodealerts) April 4, 2021
As it stands, there’s 14.7 million ETH left on crypto exchanges; the equivalent of thirty billion dollars or 12.8% of Ethereum’s total supply. The last time amounts sunk to such lows, in August 2019, ETH was worth $220 a coin, around a tenth of its price today.
📉 #Ethereum $ETH Balance on Exchanges just reached a 19-month low of 14,787,797.350 ETH
View metric:https://t.co/1dCpD2ey8E pic.twitter.com/SKSTlNbzTn
— glassnode alerts (@glassnodealerts) April 3, 2021
What’s more, whales—large entities that hold lots of Ethereum—are decreasing at all levels. According to Glassnode, the number of wallets holding more than 1,000 coins ($2,057,784) hit a three-year-low over the weekend; the number holding more than 100 coins ($205,784) sunk to a twenty-month-low, and it’s a similar story for entities controlling more than 10 ($20,587) coins or 32 coins ($65,851) .
What’s going on?
All this means that Ethereum whales could be selling off their holdings, moving ETH to cold storage or staking their ETH in DeFi protocols.
📉 #Ethereum $ETH Number of Addresses Holding 1k+ Coins just reached a 3-year low of 6,523
View metric:https://t.co/iDNXAbbLRt pic.twitter.com/Wk3InmOLGx
— glassnode alerts (@glassnodealerts) April 3, 2021
Putting crypto in cold storage means to take one’s crypto off of exchanges or online wallets and to place it in offline wallets stored on memory sticks or hard drives. This ETH, more cumbersome to trade, reduces the amount of Ethereum that traders can move easily, theoretically increasing demand for Ethereum.
📉 #Ethereum $ETH Number of Addresses Holding 100+ Coins just reached a 20-month low of 45,349
Previous 20-month low of 45,355 was observed on 02 April 2021
View metric:https://t.co/FbjiMG3uFX pic.twitter.com/As9dUR6da7
— glassnode alerts (@glassnodealerts) April 3, 2021
One other possibility is that whales are sending their ETH to high-yield decentralized finance (DeFi) protocols. Such DeFi protocols often attract yield farmers—investors who game DeFi protocols to earn lucrative returns on their holdings.
So… Good thing? Bad thing?
Tl;dr, the signs can be taken both ways.
If whales are moving to cold storage, decreasing the supply of Ethereum in circulation on exchanges is only good for Ethereum, a coin currently in hot demand. If they’re moving funds to DeFi, that’s...good for DeFi.
On the flip side, the dip in the number of whales could indicate that they’ve sold off their ETH because they think the price is close to the top and it's downhill from here.
The only thing that’s beyond any reasonable doubt is that Ethereum is in an exciting place right now. It set a new record of $2,152 in the early hours of April 3. While it currently trades for a little less than that, $2,045, that it's still trading above $2,000 suggests that traders aren’t balking at the new price tag. It’s been a great time for Ethereum miners, too: they took home record total revenues of $1.38 billion last month.
The one conclusion all the data unanimously converges on is that Ethereum is not going anywhere in a hurry.