One of the early Ethereum (ETH) ICO investors may become a market factor. The large-scale buyer liquidated some of his early holdings but may own a larger wallet cluster that will affect liquidity trends and investor behavior.
An old wallet linked to the Ethereum (ETH) ICO from 2015 became active, realizing gains after spot selling on Binance. The wallet liquidated 48,500 ETH for $154M, at a price of $2,658.67, retaining another 15,600 ETH. However, a wider cluster of early ICO investors may be linked to the buyer.
The same whale bought ETH at $0.31 per token during the ICO. A few hours after the initial sale, the wallet moved another 5K ETH to OKX for spot selling. The wallet’s profile shows the whale owns no other tokens, except for a negligible USDC deposit. The wallet has been a counterparty to the MakerDAO voter contract, but owns no other tokens or NFT.
Reawakened dormant wallets spark concerns that long-term ETH holders may decide to divest, at least temporarily. The selling arrived after Jump Crypto started a series of divestments, by un-staking and liquidating its ETH holdings.
Some whales may not be interested in holding ETH for utility purposes, or to provide liquidity to DeFi. Entities like the Plus Token Ponzi divested some of their holdings, but still carry more than 19K ETH, valued at $51M. The Plus Token wallets may also expand their liquidation as they abandon the ecosystem.
Demand for ETF buying remains slow, with funds mopping up 40K ETH on a good day. For now, Grayscale remains an influential seller, delaying expectations of an ETH rally above $4,000.
Whales mostly became active after the end of 2023, as prices recovered and showed signs of a bull market. Whale activity picked up, with selected wallets receiving tens of thousands of ETH. The exact intentions of the wallets cannot be guessed by on-chain data, but may affect the spot market. Overall, ETH activity originates from top wallets, belonging to exchanges, DEX, validators or other protocols, while small-scale users barely make a dent on influencing the network.
Ethereum’s wealth distribution favors the top 500 whales
The early buyers sit on holdings of more than 682K ETH. Those holdings are still a fraction of Grayscale’s 2.3M ETH stash, but with more early investors waking up, the fund inflows may affect the Ethereum ecosystem.
The Ethereum ICO achieved returns at 8,528 times the original price, even after the recent market correction. Previously, early investors and even the Ethereum Foundation sold at peak prices above $3,500 per ETH.
The biggest share of ETH was still generated for crowdsale participants. Even before mining, Ethereum’s network had distributed more than 70M tokens. After that, mining and proof-of-stake expanded the supply to 120M tokens. Staking and liquid staking have the biggest influence on the ecosystem, but whales can also affect DeFi protocols or the centralized spot market.
Ethereum’s wealth distribution is still top-heavy, with the biggest 500 holders controlling more than 42M ETH, rivaling the amount of staked tokens.
Ethereum DeFi slows down
Ethereum DeFi is slowing down, as ETH erased a big part of its market price. The total value locked in DeFi fell to $49B equivalent, mostly due to the lost value of ETH as collateral.
Ethereum’s DeFi space also flowed into L2 networks, both in terms of activity and in wrapped tokens and stablecoins.
The Ethereum chain saw outflows of $8.8B in value as tokens moved to the leading L2 networks, Arbitrum and Optimism. Most L2 networks have significant net flows in the past three months, lightening the load on the Ethereum main net.
For some, the L2 story is a success, as the protocols successfully scale Ethereum. But the switch to L2 has slowed down the ETH token burn, raising inflation to 0.67% per year, from 0.53% in the past month. The Ethereum network now produces more than 15K new tokens each week, on par with the holdings of some whales. The newly produced ETH goes toward fees for validators as well as to block builders. Top block builders like Beaver Build are also among the top ETH sellers as they try to lock in gains from their activity.
Cryptopolitan reporting by Hristina Vasileva
