Ethereum is struggling to keep its wealthiest investors in line, as Ether (ETH), its native token, suggests that it will experience more losses in the short term.
Glassnode, a blockchain data analytics service, revealed that the number Ethereum addresses with at least 1,000 ETH fell to 6,292 Monday. This is the lowest reading since April 2017. The January peak was 7,239, which is the lowest reading since April 2017.
Number of Ethereum addresses that have a balance of at least 1000 ETH. Glassnode
To realize institutional and retail sentiments, on-chain analysts often monitor ETH distributions between addresses. They refer to wallets with more than 1,000 ETH (roughly $3.92million at currency exchange rates), as “whales” because they can influence interim market trends through large sell or buy orders.
However, the number of so-called whales is dropping indicates a continuing selling trend among the wealthiest Ethereum wallet owners. The number of Ethereum addresses holding at least 10,000 Ethereum (or $39.20 million) has fallen by almost 4.5%, going from 1,208 in June, to 1,156 at this writing.
Number of Ethereum addresses that have a balance of less than 10,000 ETH. Glassnode
However, the number of ETH purchased has increased by nearly 450% in the past year, from 1,065 up to 1,156.
Small investors are now accumulating
Unlike whales who carry large amounts of Ether, small-sized wallets have been at the forefront in Ether’s 2021 price rise.
Glassnode data, for example, shows that on Monday the number of Ethereum addresses having a balance of at least 0.01 ETH ($40) reached an all-time high in excess of 71.23 millions. This included wallets that had at least 0.01 Ethereum ($40), which saw their numbers rise to 20.31million, compared with 10.66 million at this time last year.
Addresses holding at least 0.01 ETH ($400), jumped to 6.44 Million this Monday, compared to 3.62 Million on January 1, 2021. This is almost a double increase, indicating a higher retail interest for the second-largest cryptocurrency in the world.
Number of Ethereum addresses that have a balance of less than 0.1 Ethereum. Glassnode
ETH eyes bullish reversal
As Ether failed to reach $4,000 psychological resistance, the latest Ether whale decline was evident.
Tuesday’s drop in ETH/USD was more than 3.27%, to an intraday low at $3,880. The drop was part of a larger correction that began after Ether tested a downward-sloping trendline for resistance on December 23.
The chart below shows how the trendline is part of a downward channel that looks like a “falling wedge”.
Daily price chart for ETH/USD with falling wedge. Source: TradingView
Falling wedges can be described as bullish reversal patterns. They appear when the price trend lowers within a trading range with two converging trendslines. The instrument eventually breaks below the structure’s upper trendsline or after reaching its apex (where the two trendlines meet).
In a rising wedge scenario, the profit target is usually obtained by adding the maximum distance between structure’s upper or lower trendline and the breakout point. This puts ETH’s price in the $4,200 to $5,000 range depending on its breakout level.
Daily price chart for ETH/USD with falling wedge targets Source: TradingView
Ether’s price has still plenty of room to fall, towards $3,200 in the worst case scenario. This is the point where wedge’s trendlines meet.
Related: Why Ethereum prices could drop to below $3K by 2021
Pentoshi, an independent market analyst, stated that Ether is stuck in a “bear-contested” and “bull-contested” zone, as illustrated in the chart below.
Three-day chart of the USD/ETH exchange rate. Source: TradingView, Pentoshi
“Maybe it is the bottom. Pentoshi tweeted on Tuesday, “Don’t worry.”
“I don’t like it when they market gives these many times to purchase an area with important historical context such as this. Would rather pay confirmation.” You should do your research before making any investment or trading decision.