Ethereum Whales Flock to Bitcoin: What Is This Signal?
10,000 or more Ethereum to have a seven-day average of the number of unique addresses 1.050’y fell Tuesday. This is the lowest since January 2019, according to data provided by blockchain intelligence company Glassnode.
Whale addresses fell about 6% from 1.115, the highest level in December. The metric represents externally owned accounts or those controlled by private keys and excludes contract accounts that have their own code and are controlled by the code. The drop in the number of Ethereum whale addresses points to a complete sweat of the recent increase in the number of bitcoin whale addresses. The seven-day moving average of the number of addresses with 10,000 bitcoin or more has increased to 111, the highest figure since April 2019.
“Some ETH whales may have moved to BTC in anticipation of potential price discretion in the top cryptocurrency due to the effects of halving the mining reward,” crypto research analyst Connor Abendschein at Digital Assets said.
The upward trend surrounding Bitcoin’s third half of May 11 was strong and the incident has been extensively discussed by analysts over the past few months. Bullish expectations were supported by Bitcoin’s rapid recovery to just $ 7,000 in just five days after falling to $ 3,867 on March 12. This may have caused some whales to switch to bitcoin in Ethereum before it was split. This was evidenced by the number of large BTC addresses, which increased by 5% in March, while Ethereum addresses were in a downward trend.
According to the CEO and founding partner of DeFiner.org, a Minneapolis-based digital lending and borrowing platform, Jason Wu, this could continue to expand as bitcoin is primarily used as a value storage tool. As a result, whales are more likely to hold large amounts of Ethereum than large amounts of bitcoin. The main purpose of this situation is to facilitate the work done on Ethereum and then make money.
“Ethereum has a large application layer ecosystem and people’s DeFi, games, rewards, etc., Wu said. Many transactions are taking place to meet daily solution demands such as. ” More and more new addresses will be created to keep ETH.
Another possible reason for the drop in addresses holding large amounts of Ethereum could be increased investor interest in decentralized finance (DeFi).
Ashish Singhal, CEO and co-founder of the cryptocurrency exchange CoinSwitch.com, said, “Address holders are responsible for lending a large part of their assets, etc. may be moved to smart contracts of various DeFi protocols that support applications. According to Defipulse.com, the number of Ethereum locked in DeFi rose to a record level of 3.23 million in February, and is now 2.65 million, up 28% year on year. The rapidly growing DeFi area is dominated by Ethereum, and according to defiprime.com, there are 213 DeFi projects, 199 of which were built on Ethereum at the time of writing.
Small addresses are growing fast
The drop in large addresses reveals a situation unlike the steady increase in the number of addresses holding 32 or more tokens.
The seven-day average of the total address, which included 32 ETH or more, was at a record level of 114,625, with a gain of over 4% this year on Wednesday. “This increase can be attributed to the sense of uptrend associated with the release of Eth 2.0,” says Singt.
This is because an address is required to maintain 32 ETH balance to be validating in the transition from the proof of work (PoW) mechanism called Ethereum 2.0 to the proof of stake (PoS) mechanism. In a proof of work mechanism (Ethereum’s current protocol), miners solve cryptographically difficult puzzles to complete and reward transactions on the network.
In PoS, instead of miners, there are validators that lock some of their ethers by stacking them in the ecosystem. In Layman’s terms, it is like earning interest on fixed income investments such as stake and bonds. Essentially, the protocol upgrade, which can be postponed to the third quarter, will allow Ethereum owners to earn money by stake. It should be noted that the increase in the number of unique addresses with more than 32 ETH or any balance does not necessarily mean the influx of new investors. A single user can hold multiple addresses.