Ethereum

Ethereum Sees Mounting Sell Pressure as Whales and Early Investors Offload Amid Ongoing ETF Outflows

2 days ago
Bitcoin Ethereum News

At present, Ethereum is moving through an onslaught of sell-side activity. On-chain data shows that some of the biggest players — whales, institutional entities, and even some early participants of the ICO — have really stepped up their selling over the past week.

Combined with price dips, we now see some previously dormant accounts stirring back to life. And despite all the optimism around the ETH upgrade, the Ethereum-focused ETFs are seeing capital flight. Altogether, this paints a pretty cautious-looking picture for market sentiment around Ethereum.

In the past week, Ethereum whales have altogether gotten rid of about 143,000 ETH. This has been happening, and it’s an increasing trend, in the context of growing uncertainty for traders and holders of ETH. Some of the whale movements we see might just be profit-taking or risk management. But the scale and the timing of these whale actions suggest a much larger shift in sentiment—one that could significantly impact the direction of the price in the short to medium term.

Galaxy Digital Leads Whale Activity with $79M in ETH Deposits

A prominent digital asset management firm, Galaxy Digital, which is led by Mike Novogratz, is one of the most noticeable contributors to the surge of ETH transfers lately. On-chain data indicates that G|alaxy deposited 12,181.161 ETH, which is worth around $19.02 million, to Coinbase just eight hours ago, which seems to be taking advantage of a recent price dip.

This deposit represents Ethereum sent to centralized exchanges by Galaxy Digital over the last five days to the tune of 49,681 ETH. That translates into approximately $79.36 million worth of deposited Ethereum. Galaxy has now sent nearly 50,000 ETH to CEXs in just half of a week. This average price translates to around $1,597 per ETH. That’s the same price we see on Coinbase right now. What this signals is anyone’s guess.

Considering Galaxy’s sway and past of being actively involved in the digital asset market, large transfers like this are hardly ever without meaning. When big deposits hit an exchange, they are usually taken as the sign of something nasty on the way for the price of that asset—nasty, that is, if you’re long the asset in question. That’s because big deposits mean big potential sales, and the implication of these potential sales is that the prices of the assets are going to go down. Once again, though, it’s important to note that correlation is not causation.

Dormant Whale Awakens: Ethereum ICO Participant Moves $47.8M After 3 Years

What adds even more bearish pressure is the activity from an early Ethereum investor who participated in the project’s 2015 Initial Coin Offering (ICO). After three years of dormancy, the investor transferred 30,000 ETH — worth around $47.85 million — out of cold storage. Of that amount, 3,000 ETH, or approximately $4.78 million, was moved to Kraken, a leading U.S.-based cryptocurrency exchange.

This investor started off with 76,000 ETH at Genesis. They received it during the Ethereum ICO, when the effective cost of that much ETH was just $23,560. That translates to the original purchase price of around $0.31 per ETH, which is kind of astonishing to think about. At current prices, their remaining holdings are still worth more than $121 million.

Although just a portion of the shifted ETH has arrived at exchanges, the transfer of these hitherto idle funds usually signals direct sales or liquidation of some kind. Taken with other recent market developments, it made for a suspect scenario: Old wallets were waking up and moving funds, and the market was going down, which also made it somewhat more likely that these old wallets were selling.

Ethereum ETF Outflows Extend into Seventh Consecutive Day

Institutional investment flows are proving to be another headwind for Ethereum. On April 16, U.S. spot Ethereum ETFs saw net outflows totaling $12 million, which means that for the last seven days, these products have been seeing withdrawals. The spot ETF is supposed to be another flagship product for institutional use.

The recent trend in ETF inflows and outflows being viewed as a reliable indicator for gauging institutional sentiment around an asset is definitely a departure from what had become the norm for Ethereum this past year. We had seen it become a go-to for inflow-driven sentiment around Ethereum, serving as an almost real-time indicator for how investors were thinking about the protocol.

But the lack of capital entering the ecosystem from this source — particularly now when other sources of capital seem to be drying up — speaks volumes.

Market Faces Mounting Uncertainty as Sell-Side Pressure Builds

The collective forces of whale selling, reactivated ICO-era wallets, and steady ETF outflows give a rather gloomy market picture for Ethereum at the moment. Even as the price held steady during the last few sell-offs, the combined volumetric pressure of these three detrimental factors emerging at the same time strongly suggests that confidence in the long-term prospects of Ethereum (and, by extension, the Etherean state machine) is deeping along with the price.

In less than a week, more than $140 million worth of ETH has been shifted toward potential sales. The market is now in a state of heightened uncertainty. What we may be looking at here is either a deeper-than-expected correction that’s unfolding in real time or just a temporary shakeout before the ETH price rebounds. This will be determined largely by overarching macro factors, how investors feel about the market, and whether Ethereum can maintain critical support levels in the face of such intense sell pressure.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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Source: https://nulltx.com/ethereum-sees-mounting-sell-pressure-as-whales-and-early-investors-offload-amid-ongoing-etf-outflows/