The supply concentration of Ethereum among "whales", or large investors, has been growing, marking a notable shift in wealth distribution. As of Wednesday, October 18, 2023, billionaire tier investors holding more than a million ETH controlled 32.2% of the available supply, a level not seen since 2016, according to data from Santiment. This increase in supply concentration coincides with a surge in transaction activity and a modest price increase of less than 1% for Ethereum.
Despite significant price fluctuations in mid-October, which saw both gains and losses exceeding 2% in the ETH price, these wealthy individuals have been actively accumulating assets. The surge in whale transactions corresponds with their increased accumulation. The volume of these transactions reached its second-highest level in the past five weeks and aligned with major price movements around October 1 and 2.
Simultaneously, smaller wallets holding between 1,000 to 100,000 ETH have been reducing their share of the total supply and selling off their holdings as Ethereum prices declined to around $1,560. This decrease in distribution among smaller wallet tiers coincided with an increase in whale transaction volume.
However, this trend is contrary to Glassnode's indication that these whales have consistently offloaded their ETH since 2020, leading to a sale of about $20 million in ETH. This is in stark contrast to Bitcoin whales who have largely retained their holdings as per CoinMarketCap.
Despite the sell-off from the larger holders, Ethereum staking continues to be robust. Beaconcha.in reports a record 27.6 million ETH staked, representing about 23% of the total supply. Since The Merge last September, the supply has decreased by 260,640 ETH or $409 million as per Ultrasound.Money.
However, despite these bullish staking and deflationary supply dynamics, Ethereum's price continues to decline alongside other altcoins, falling another 1.3% on the day and losing 4.5% over the past fortnight. Ethereum is now down 68% from its all-time high or peak, underperforming compared to Bitcoin which is down 59%.
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