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Although Ethereum is still trading somewhat strongly above $4,300, a closer examination of on-chain activity shows that whale accumulation and larger network inflows are not aligned.
Whale address 0x4ED0 has added to an aggressive buying spree that started Aug. 11 by purchasing an additional 5,553 ETH (worth $24.44 million) in the last 40 minutes. This one address has since amassed 18,447 ETH ($81.05 million) at an average price of $4,417 and 1,357 WBTC ($160 million) at an average of $117,547.
Borrowing for ETH
The whale borrowed $114.02 million USDT after the tokens were promptly deposited into Aave, indicating a highly leveraged approach. On the surface, this appears to be a significant display of confidence by moneyed players.
Zooming out though reveals a less hopeful image of Ethereum’s on-chain data. The total amount of whale activity has been declining in spite of these sporadic large purchases. Compared to earlier this year, inflows to Ethereum-based exchanges have slowed, and the number of addresses holding more than 10,000 ETH is remaining stagnant.
According to this divergence, many whales are either distributing or sidelined, while some are doubling down. The drop in influxes into Ethereum’s ecosystem in general is another alarming indication.
Tactics change
In the absence of consistent inflows, whale leverage tactics like 0x4ED0’s could increase volatility instead of long-term stability.
Technically, Ethereum is still in a strong uptrend, maintaining above the 50-day EMA at $4,050, with $3,330 serving as further support. However, in the absence of wider participation, price rallies run the risk of being dominated by a small number of whales, making ETH susceptible to abrupt reversals should these players unwind their positions.
The conclusion is that while whales are still purchasing, the amount of money entering the Ethereum ecosystem is decreasing. This leads to a precarious situation in which speculation and leverage outweigh natural growth.
In addition to individual whale purchases, ETH requires more widespread, healthy participation across DeFi, staking and ecosystem demand in order to maintain momentum.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team