Strong hands appear to be helping the recent rally to record highs for Ethereum’s ether cryptocurrency.
The number of whale addresses (with at least 10,000 ETH) rose to a 13-month high of 1,103 on Saturday, according to blockchain analytics firm Glassnode. In this month alone, more than 35 whale addresses were created, 75 since mid-November.
The increasing accumulation of investors with deep pockets could have pushed the price of the ether up.
Aether addresses with more than 10,000 coins
Source: Glassnode
The second largest cryptocurrency by market value rose to a record high of $ 1,450 late Sunday and was last switched near $ 1,405, up 90% year over year, according to CoinDesk 20 data.
Small investors also appeared to have participated in the rally. Both the number of non-zero addresses and the addresses with at least 0.1 ETH have risen to record highs.
While the on-chain data is encouraging to ether bulls, conclusions should be drawn from metrics that focus on address growth changes as a single user can control multiple addresses. However, the data appears to indicate an inflow of money into the ether market, likely via new and existing investors.
Supply bottleneck?
Data also shows that ether is leaving the centralized exchanges, potentially creating a supply bottleneck and allowing a stronger uptrend, according to one analyst.
The number of coins held on exchanges fell to 15,469,582 over the weekend, the lowest level since October 2019. In the last four days alone, the exchange rate has fallen by more than 1 million.
Ethereum balance held on exchanges
Source: Glassnode
In addition, the exchanges recorded a net outflow of 666,689 ETH on January 20, the largest one-day exodus since May 2019.
“ETH, which is leaving the exchanges, is optimistic as a lower supply makes it easier for the price to push higher, which leads to a supply crisis,” said trader and analyst Alex Kruger to CoinDesk. “I know that big parties are accumulating.”
The outflow of ether from centralized exchanges does not necessarily mean that investors hold their coins directly, which Bitcoin would.
Some traders are likely to deposit ether in decentralized exchanges and pools of liquidity, while others might “poke” coins for passive income. Staking refers to locking the cryptocurrency to receive rewards for participating in transaction validation on a proof-of-stake blockchain. To that end, Ethereum, which is moving to a major upgrade, launched its Beacon Chain in December.
Stronger Profits Ahead?
“The ETH sling is only now being withdrawn, and we can expect a strong upward trend in the first half of 2021,” said Jehan Chu, managing partner of Hong Kong-based crypto-investment firm Kenetic Capital, decentralized finance (DeFi) growth increases organic Demand for cryptocurrency.
Ether locked in DeFi applications has increased from 6.615 million to 7.002 million in the last 15 days. However, according to DeFi Pulse, the number is still well below its early January high of 7.30 million and its 2020 high of 9.771 million.
The options market is showing strong bullish sentiment: One, three and six month put-call skews are trading below zero. This is a sign that calls (bullish bets) are fetching higher prices than puts (bearish bets) according to the data source Skew.
Ether put-call inclinations
Source: Skew
Also read: Ethereum’s ether cryptocurrency sets a new high of $ 1,450
