As the crypto market faced considerable headwinds with Bitcoin dropping below $40,000, Ethereum (ETH) managed to retain support at $2,200, showcasing resilience amidst the market downturn. Notably, on-chain indicators suggest a surge in whale activity on the Ethereum network, contributing to the cryptocurrency’s relatively robust performance.
Despite an overall market contraction of 7%, Ethereum sustained losses of approximately 5% between January 22 and January 24. Santiment’s Whale Transaction Count, tracking daily transactions exceeding $100,000, revealed a substantial increase on January 23, surpassing 1,190. This marked the highest count since Ethereum’s price peaked at $2,690 on January 11.
The heightened whale activity has been pivotal in Ethereum’s ability to withstand the market sell-off. Increased whale transactions provide liquidity, facilitating favorable trades for panic sellers and instilling confidence among retail traders.
Ethereum’s exchange reserves experienced a consistent decline, potentially linked to the surge in whale activity. This trend aligns with a broader strategy among corporate entities and large investors to accumulate Ethereum, possibly in anticipation of an impending Ethereum spot exchange-traded fund (ETF) approval.
Moreover, Ethereum’s exchange supply has been decreasing since the transition to Proof of Stake (PoS) in May 2023, coinciding with an extended period of price uptrend. The current decline in exchange supply, coupled with the rise in whale transactions, suggests a preference for long-term holding and staking among Ethereum investors.
Despite the market challenges, Ethereum’s supply on exchanges dropped by 150,000 ETH in the last four days, signaling a prevailing inclination for long-term storage and passive income staking. This strategic shift could act as a stabilizing factor, supporting Ethereum’s defense of the $2,000 support level.
Looking ahead, Ethereum’s ability to stay above $2,000 will likely hinge on the ongoing decrease in exchange supply and the sustained interest from whale investors. The in/out of the money around price data also indicates potential buying pressure if Ethereum approaches the $2,100 level, as holders may seek to defend their positions.
While a rebound to the $2,500 territory remains challenging in the current market dynamics, Ethereum bulls could face resistance from holders looking to take profits around the $2,400 level. As the market evolves, these on-chain dynamics will play a crucial role in shaping Ethereum’s price trajectory.
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