What part did Ethereum whales play in the recent correction?
April has turned out to be quite an eventful month for Ethereum. As the world’s second-largest cryptocurrency registered its latest ATH, the asset saw a growth of over 40 percent in the month’s time. However, price corrections too have been swift to enter the market as evidenced in the past 24-hours. ETH in the past 24-hours seems to have lost close to 10 percent of its value and now trades close to the $2.2k price level.
While most investors are confident about ETH’s long-term prospects, the coin seems remarkably susceptible to Bitcoin’s price, however, it is also important to examine whether other factors inherent to ETH’s ecosystem contributed to the latest price correction.
In the past day’s time ETH’s fall has been quite noticeable, the asset traded at a high of $2661 yesterday and since then has dropped below the $2264 support turning into a strong resistance level. Data provided by Santiment highlighted the strong run ETH had as it breached its previous ATH. In this context, one factor that drove the price stands out – they are ETH’s whales.
Large accounts have always been crucial in the crypto ecosystem. In ETH’s case, it was no different. As the coin surged from around $1500 towards the end of March to the high it registered in April, large accounts have been consistently moving the asset out of exchanges and presumably into private offline wallets.
Santiment noted that addresses with over 10k ETH have been quite active during this timeline and may have substantially contributed to the leading altcoin’s bullish momentum over the course of the month.
Interestingly, in the past few days, Glassnode also reported that Ethereum’s on-chain USD transaction fees surged to a level that is the second-highest in the coin’s history a few days ago. The on-chain fees hit $47.3 million per day and were inching closer to the ATH that was registered on 21 Feb of over $48 million.
While whale accounts can play king-maker from time to time with regard to the coin’s price action and uptrends, it also leads to the heavy concentration of the asset in fewer hands.
While coins like ETH don’t necessarily have a problem with regard to adoption, token concentration in whale accounts can also lead to a tremendous boost in the coin’s volatility. While volatility can also help move the coin upwards, ETH’s correlation with BTC is a limiting factor.
ETH continues to have a high correlation with the king coin. As seen in the past 24-hours, this makes ETH mirror BTC in case of a price correction and can also amplify the price drop if large accounts come under the market’s pressure and trigger panic sell-offs.
However, in the long run, ETH’s fundamentals seem to be thoroughly backing the coin. According to data provided by Glassnode, the total value in the ETH 2.0 deposit contract continues its 2021 trend and reached yet another ATH.
Despite these short-term price corrections, ETH still enjoys a lot of confidence from its investors and has been able to navigate bear markets with minimal losses. While the same is likely to continue, fewer price corrections and reduced whale concentration may enable the coin to see greater price discovery post its present ATH and keep it immune to immediate pullbacks.