As a seasoned crypto investor with a keen interest in Ethereum, I’m both elated and cautious about recent developments. The SEC’s approval of spot Ethereum ETFs has undeniably fueled optimism and contributed to the asset’s impressive price surge. However, I can’t ignore the concerning trend of increased ETH inflows into exchanges.
Ethereum has been flirting with the $4,000 threshold recently due to the SEC’s game-changing approval of spot Ethereum Exchange-Traded Funds (ETFs). This regulatory green light has ignited renewed enthusiasm among traders regarding Ethereum’s potential price growth.
However, increased inflows of ETH into cryptocurrency exchanges could spell trouble.
ETH Inflows Signal Selling Trend
As a researcher studying the cryptocurrency market, I’ve observed that Ethereum (ETH) has experienced a significant surge, with gains amounting to nearly 20% within the past month. The primary driver behind this resurgence can be attributed to mounting anticipation among market participants regarding the potential approval of Ethereum Exchange-Traded Funds (ETFs) in the United States.
As an analyst, I would acknowledge that the asset’s price response following approval didn’t live up to expectations initially. However, I would also emphasize the significance of its subsequent progression towards the $4,000 mark.
Since January, the amount of Ether going into exchanges has peaked, reaching a net deposit of approximately 140,660 ETH on May 26th – the largest inflow over a single day in over a fourth of a year.
Based on IntoTheBlock’s findings, substantial deposits into exchanges often reflect selling actions. People may choose to sell in response to profit-taking opportunities or due to apprehension, anxiety, and doubt (FUD).
The amount of Ether flowing into exchanges hit the highest point since January!
On Saturdays, a net inflow of $140,660 worth of Ethereum was transferred to exchanges, which represents the largest deposit volume to exchanges in over 4 months.
High inflows to exchanges are typically a sign of selling behavior, as people either…
— IntoTheBlock (@intotheblock) May 28, 2024
Who’s Profit-Taking?
A recent surge in prices caused Lookonchain to notice that a savvy investor unloaded 3,025 Ethereum tokens for the equivalent of 11.8 million DAI, which was around $3,904 per ETH. This transaction yielded a profit of roughly $1.11 million.
Between the years 2017 and 2020, this investor acquired a total of 17,770 ETH for an average cost of $182 each. On March 28, 2024, they successfully sold these ETH tokens at a price of $3,503 apiece, resulting in a substantial profit of approximately $59 million.
As an Ethereum analyst, I’ve noticed an intriguing transaction from a major Ethereum holder. This whale withdrew 2,856 Ether, equivalent to around $11 million, from Kraken. Notably, this same investor had amassed a significant position of 35,176 Ethers, purchased at an average price of approximately $428 per ETH between October 2018 and November 2022 on the same exchange.
On October 20, 2023, a large investor, often referred to as a “whale,” sold back all their Ethereum (ETH) tokens worth approximately $41.6 million into Kraken when the ETH price was at $1,610. Unfortunately for this investor, they missed out on further market growth as the crypto market rebounded shortly after, resulting in potential earnings of around $122 million if they had held onto their tokens instead.
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2024-05-28 21:54