Significant Shift in Ethereum? Reason Behind Strategic Investors Acquiring ETH Assets
ethereum surges as smart buyers double down despite market drag
While DeFi cools and selloffs slow, long-term wallets hit record highs, points to maturing altcoin demand
With crypto markets in a constant flux, Ethereum [ETH] is bucking the trend. Here's what's really brewing beneath ETH's surface.
In contrast to Ethereum's lifted supply, there's no major recovery in first or momentum buyers. RSI for these cohorts remains subdued, according to Glassnode data.
However, conviction buyers show steady buys since late March, maintaining an RSI of around 80, indicating persistent belief in ETH, even as the overall market whimpers. Loss sellers reached their peak in late April but have since subsided, with RSI falling below 50, signaling a drop in irrational sentiment.
DeFi slows, but conviction holds strong
Despite a slight uptick in DeFi trading action, DEX volumes are nowhere near their peak, with TVL in Ethereum-based DEXs down 90% from the all-time highs, and monthly trading volumes dropping about 55%. Could users be shifting to different chains or off-chain alternatives due to market uncertainties?
Yet, accumulating addresses - those that have never sold - are capturing ETH at an impressive clip. Over 640,000 ETH moved into these wallets in the last two days, the largest inflow since 2018, according to CryptoQuant data. This behavior hints at the growing confidence of long-term holders despite turbulent price swings.
Ethereum's outlook and implications
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Strategic accumulation of Ethereum
- Commitment of Believers: The sudden surge in accumulation by long-term holders, or conviction buyers, highlights a strong commitment to the Ethereum ecosystem. These investors are likelier to hold and buy during periods of low market activity and price volatility, demonstrating a growing faith in the asset's future potential.
- Growing Confidence amid Uncertainty: Over the past 48 hours, accumulation-focused wallets captured over 640,000 ETH, the most since 2018. This inflow suggests a growing conviction amongst deep-pocketed participants undeterred by short-term market fluctuations.
- Network Advancements: Ethereum's continued advancements in proof-of-stake transition, Layer 2 (L2) adoption, and evolving staking mechanisms provide a solid foundation for substantial growth in the future.
Ethereum vs. Bitcoin
- Altcoin Pioneer vs. Store of Value: Although Bitcoin is primarily seen as a digital gold alternative, Ethereum is viewed as an altcoin phenomenon. Ethereum's ecosystem represents a dynamic, expansive universe of possibilities beyond a single function, like Bitcoin's role as a store of value.
- On-chain Activity: Ethereum's rally may reflect increasing interest in long-term growth prospects, while Bitcoin's price movements have traditionally been driven by sentiment shifts related to its safer-haven status. The growth in unique wallet interactions emphasizes increasing usage and potential future adoption of Ethereum.
Ethereum's future
- Bullish Run on the Horizon: The large-scale accumulation by conviction holders usually precedes important market shifts. This could imply a future rally for Ethereum, similar to its previous consolidation phases.
- Institutional Interest: The inflow of ETH into accumulation wallets could indicate institutional involvement in the market, which can lead to a medium-term bullish structure.
- Consolidation and Potential Breakout: Ethereum might be heading towards a consolidation phase similar to the one it experienced between late 2022 and early 2023. This could lead to a significant upward breakout, although patience would be required.
- Despite a slowdown in DeFi trading and a decline in DeFi-related TVL and monthly trading volumes, Ethereum's [ETH] supply is seeing an uptick, with long-term wallets hitting record highs, showcasing an increasing demand for altcoins.
- RSI for first and momentum buyers remains subdued, indicating a lack of major recovery, while conviction buyers have been steadily buying since late March, with an RSI of around 80, signifying a persistent belief in ETH.
- Loss sellers peaked in late April but have since subsided, pointing towards a drop in irrational sentiment in the overall market.
- Over 640,000 ETH moved into accumulating addresses, the largest inflow since 2018, indicating a growing confidence among long-term holders.
- The strategic accumulation of Ethereum by believers highlights a strong commitment to the Ethereum ecosystem, demonstrating a growing faith in its future potential.
- Ethereum's advancements in proof-of-stake transition, Layer 2 (L2) adoption, and evolving staking mechanisms provide a solid foundation for substantial growth in the future.
- Ethereum's ecosystem represents a dynamic, expansive universe of possibilities beyond a single function, setting it apart from Bitcoin's primary role as a store of value.
- The growth in unique wallet interactions emphasizes increasing usage and potential future adoption of Ethereum, potentially leading to a significant upward breakout after a potential consolidation phase.
