On-Chain data shows Ethereum Whales have been selling for four months, indicating that the asset may not recover soon.
Ethereum may not be in the best situation right now, according to a new insight post by on-chain analytics company Santiment. The company examined various metrics of Ethereum to get clues about the asset’s future development.
Firstly, the analysis company discussed the “transaction volume” of the asset, i.e., the total number of tokens transferred on the network daily.
Here is a chart showing the trend of this indicator:
As seen in the graph, Ethereum’s transaction volume has been declining recently, reaching a low level, indicating that the network is currently not experiencing significant usage.
“While this is not necessarily a warning signal for any asset, it does suggest that the masses are exhibiting disinterest during a time when many traders cannot decisively determine if the $1,650 price level is over or under-valued,” explained Santiment.
The company also pointed out that the $1,500 level has received some psychological support. So if the cryptocurrency falls towards this level, volume could recover.
While volume may provide evidence of general investor interest, it may not necessarily reflect the sentiment of the largest investors. Therefore, the second indicator Santiment examined is the total number of investors holding between 10 and 10,000 ETH in their wallets.[Chart Image]
These investors holding balances in this range are known as Sharks and Whales, entities that can have some influence due to their large holdings. The graph shows that these cohorts, as a whole, have been continuously selling for about four months since ETH reached its peak above $2,100.
Previously, these institutional investors had increased their holdings, but it seems that they succumbed to the temptation of profit-taking once ETH reached a sufficiently high level. The sell-off has slowed down recently, but these holders are still disposing of a net portion of their holdings.
“This ongoing decline in supply from Sharks and Whales is something we’ll want to keep an eye on,” said the analytics company. “Prices can still rise as they take profits, and their holdings are far from perfectly correlated. But as far as a signal for an immediate return to $2,000 and beyond, it certainly won’t be sustained by Whales.”
Finally, Santiment examined the “development activity” of the asset to see how much work developers have put into the project’s public GitHub repository.[Chart Image]
In general, this metric can be one of the things to watch to see if a project has long-term potential or not. While Ethereum’s developers have not stopped working hard recently, it can be safely assumed that they are still committed to the asset. At least for now, this is one of the indicators that are not bleak for ETH.
Ethereum has been unable to break out of the sideways movement recently, as the price continues to hover around the $1,600 mark.[Price Chart Image]
In conclusion, Ethereum’s on-chain data suggests that the asset may not recover soon. The declining transaction volume and ongoing selling by Sharks and Whales indicate a lack of interest and profit-taking among investors. Nonetheless, the development activity remains positive, showing that developers are committed to the asset. The price remains stagnant around $1,600, unable to make a significant move in either direction. Investors should closely monitor these on-chain indicators to gain insights into Ethereum’s future prospects.