4 - 6 minute read
Ethereum (ETH) investors may want to brace themselves for a bearish market in the near term, as the share of ETH held by so-called whale addresses has dropped since the Shapella upgrade in mid-April. The upgrade allowed investors to withdraw ETH locked via staking, which some believed would increase selling pressure. Since the upgrade, investors have withdrawn over 1.97 million ETH worth around $3.6 billion, according to Beaconcha.in. This trend has been reflected in the behavior of whales, which are defined as addresses holding 1,000-10,000 ETH. The amount of Ether held by whales was over 14.033 million ETH on May 1, compared to 14.167 million ETH on April 12 when Shapella went live on Ethereum.
Interestingly, other address cohorts also showed a decline, including sharks (100-1,000 ETH), fishes (10-100 ETH), crabs (1-10 ETH), and even mega-whales (10,000+ ETH). Only shrimps, or addresses holding less than 1 ETH, accumulated during the period. This suggests that large investors may be leaning bearish in the near term, as the price of ETH is down over 3.5% since the Shapella upgrade.
Historically, less Ethereum whales typically means heightened downside risk for ETH price. Whale activity typically acts as a leading market indicator, with rich investors accumulating typically preceding a price rise, and vice versa. The price-whale positive correlation existed until March 2020, when retail mania took over alongside the Federal Reserve’s quantitative easing, and the correlation snapped. However, since then, whale holdings have risen by nearly 1 million ETH, while ETH’s price has more than doubled to around $1,850, hinting at a possible return of the price-whale correlation, which would be a bullish sign for Ethereum.
The $2,000-level is an important psychological resistance level for ETH/USD that bulls have been unable to break upon multiple attempts in 2023. On the daily chart, ETH/USD holds above the short-term support provided by its 50-day exponential moving average (50-day EMA; the red wave), near $1,840. A successful rebound from here opens $2,000-$2,125 as the next upside target range in Q2. Conversely, a break below the 50-day EMA risks sending ETH toward its 200-day EMA (the blue wave) near $1,670, down about 10% from current price levels.
The Bottom Line
The decline in the number of Ethereum whales holding 1,000-10,000 ETH may signal bearish sentiment in the near term. Historically, less Ethereum whales typically mean heightened downside risk for ETH price. It is important for traders to monitor the behavior of large investors in order to assess potential price movements. The $2,000-level is an important psychological resistance level for ETH/USD, with bulls having been unable to break it upon multiple attempts in 2023. A successful rebound from the short-term support near $1,840 could open up $2,000-$2,125 as the next upside target range in Q2. Conversely, a break below the 50-day EMA risks sending ETH toward its 200-day EMA near $1,670, down about 10% from current price levels.
