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Ethereum: A Tale of Two Trends – New Users and Whale Influence

Ethereum: A Tale of Two Trends - New Users and Whale Influence

Ethereum, the second-largest cryptocurrency, is experiencing a confluence of contrasting forces. While a surge in new user activity sparks optimism, the outsized influence of major holders, known as whales, continues to be a looming concern.

 

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Surge in Ethereum’s New Users Signals Potential Growth

Data from Santiment, a blockchain analytics firm, reveals a significant increase in new Ethereum wallets created. On April 28th and 29th, a record-breaking 267,000 wallets were established, signifying the highest two-day increase since October 2022. This trend suggests a potential resurgence of interest in the Ethereum network, defying the current market downturn that has impacted many other cryptocurrencies.

Analysts speculate that several factors might be driving this influx of new users:

  • Anticipation of future growth: Investors might be looking ahead to upcoming Ethereum upgrades promising enhanced scalability and security, essentially betting on the network’s long-term potential.
  • Bargain hunters: The recent price dip could be seen as an attractive entry point for new investors seeking a discount on Ethereum.

ETH Whales Hold the Upper Hand

Despite the encouraging rise in new users, a closer look at Ethereum’s address distribution reveals a significant disparity in holdings. According to CoinMarketCap, a staggering 97% of Ethereum addresses hold between $0 and $1,000 worth of the cryptocurrency, indicating a large pool of small-scale investors, often referred to as “minnows.”

However, the real power lies with a select few. Whale tracking platform Clank estimates that whales, representing only 0.10% of all Ethereum addresses, control a whopping 41% of the total circulating supply. This translates to an average holding of nearly 10 million ETH per whale, valued at a staggering $3.7 million.

Ethereum’s Resilience in a Downward Market

While the broader cryptocurrency market has experienced a downturn, Ethereum appears to be weathering the storm relatively well. In fact, Ether is up more than 30% year-to-date (YTD) compared to its opening price of around $2,282. As of today, Ethereum sits at $3,014, with a total market capitalization of $362 billion. Notably, the market experienced an average decline of 8.75% over the last week, highlighting Ethereum’s relative resilience.

Furthermore, data suggests that a majority of Ethereum investors (74%) are long-term holders, demonstrating a strong belief in the project’s future. This “hodling” mentality indicates a commitment to maintaining their Ethereum positions for the long term, even in the face of short-term market fluctuations.

Recent Ethereum Foundation Transaction Raises Questions

A recent transaction from a suspected Ethereum Foundation address has sparked speculation about its potential influence on the future price of Ethereum. The address reportedly sold 100 ETH for DAI, a stablecoin pegged to the US dollar. The purpose and impact of such actions remain unclear, leaving investors with unanswered questions regarding the short-term trajectory of Ethereum.

Bitcoin Advocate Saylor Questions Ethereum’s Future

MicroStrategy’s executive chairman, Michael Saylor, has made bold statements against Ethereum, suggesting it might be classified as a security by the SEC and not a commodity. He also predicts that a spot Ethereum ETF approval is unlikely.

Ethereum Price Analysis: A Technical Outlook

Ethereum’s price recently dipped below $3,000, reaching its lowest point since mid-February. If it fails to surpass the resistance level of $3,050, it may continue to move downwards. The major support level sits at $2,820, with a clear move below this level potentially leading to a price drop towards $2,650.

The Road Ahead for Ethereum

The contrasting trends of new user adoption and whale dominance paint a complex picture for Ethereum’s future. The coming weeks will be crucial as the SEC’s decision on Ethereum’s classification and the short-term price trajectory become clearer. However, Ethereum’s relative resilience in the recent market downturn and the upcoming network upgrades offer reasons for cautious optimism.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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