Ethereum (ETH) tokens are showing a new pattern ahead of the expected launch of several ETF investment opportunities. ETH holders have accelerated their accumulation, but the latest buying wave also puts tokens into newly created wallets.
Ethereum is turning into a “hodling” network for various reasons, but mostly the need for significant ETH collaterals. The most recent demand may come from ETF, which is also causing other users to accumulate ETH with the expectation of a bigger price rally.
Read: Vitalik Buterin reveals worries about the future of Ethereum
The recent accumulation is creating new whales, and removing more tokens from the market. The buying and holding happens among record outflows from spot centralized exchanges, including Kraken and Binance.
The holding wave includes the lockup of 40% of the ETH supply for staking, liquidity pools, and lending collaterals. ETH value is still available through re-staking protocols, which further raises the demand for tokens. Re-staking helps holders retain their ETH with a long-term horizon while tapping its short-term value.
More ETH ends up in whale wallets
Gone are the days when ETH tokens were priced as low as $200 and were used to play around with NFT. Since then, expensive main net transactions and the growth of L2 protocols meant Ethereum was turning into a base layer, and ETH into an even more valuable asset.
Moreover, with 91% of buyers in the money, there is no incentive to sell at these rates. ETH can be put to work in multiple protocols, as well as the safer option of a staking smart contract. Statistics from the past week shows net outflows from exchanges, as well as significant high-worth transactions.
Source: IntoTheBlock
The recent shift in priorities also means more than 51% of ETH is held by large-scale holders. Some may be private wallets, but the metric includes vaults, protocols, and liquidity pools.
With Ethereum, the top 500 addresses hold more than 43M ETH, comparable to the staking smart contract.
Will whale buying move ETH prices in the short term?
The current buying trend also coincides with expectations of ETH hiking to a higher price range. The coming week will start the accumulation for Ethereum’s ETF, which will require proof of holding the actual coins.
The buying may also signal a short-term price rally, setting up another accumulation stage. ETH is also watched as a potential trigger for the altcoin season.
The ETF issuers remain extremely bullish based on historical Bitcoin inflows. Since the launch of BTC products, more than $15B of funds have flowed into the market. For Ethereum’s ETF launch, the expectations are for inflows of up to 30% of that amount or up to $5B.
The ETF creators are extremely bullish on ETH, breaking above even the bravest predictions. For ETH, price milestones have been set at $6,000, and peak range predictions are between $8,000 and $10,000. However, Van Eck believes that the asset is still underpriced and predicts it may reach even higher range of price discovery. Bullish predictions see ETH get closer to Bitcoin’s price range.
The renewed ETH price action may also happen without moving coins and tokens. This will extend the trend where more than 75% of ETH wallets are long-term holders with more than 12 months of holding. In the very short term, there are expectations for ETH to go back above $4,000 and start its rally to a new price range, helped by the holders. As of June 6, ETH stagnated again, trading at $3,851.91.
Also read: wETH Price Prediction 2023-2032: Will Wrapped ETH Remain Bullish?
Despite the long-term holding, the Ethereum network is still quite busy. However, this time, two major entities are taking up most of the gas.
One of the top gas burners is the Uniswap universal router, which handles multiple tokens across several leading blockchains. However, the biggest share of gas belongs to the MEV bot, which optimizes and automates decentralized trades.
Cryptopolitan reporting by Hristina Vasileva
