In recent developments, a noticeable contrast has emerged in the behavior of major holders of the two leading cryptocurrencies, Bitcoin and Ethereum. On-chain analysis firm Glassnode has shed light on this divergence, revealing that Ethereum whales, characterized as those holding 1,000 or more ETH (equivalent to roughly $1.5 million), have been decreasing their holdings since 2020, resulting in the sale of approximately $20 million worth of ETH. In stark contrast, Bitcoin whales, individuals possessing 1,000 or more BTC (roughly $26.9 million), have largely maintained their positions during the same period.
Glassnode report shows whale’s contrasting activities
These positions come with occasional fluctuations, likely influenced by events such as the FTX exchange collapse or profit-taking following the successful bull run in 2021. This intriguing disparity in the actions of cryptocurrency whales has ignited a flurry of theories and discussions across social media platforms. Notably, individuals associated with the Bitcoin community have seized the opportunity to comment on their Ethereum counterparts. Steven Lubka, the head of private client services at Swan, a Bitcoin financial services provider, revealed that his company has witnessed a significant number of high-net-worth individuals (HNWI) expressing interest in converting their Ethereum holdings into Bitcoin.
He pointed to concerns related to regulations as a pivotal factor driving this trend. Lubka’s perspective was echoed by Jesse Shrader, CEO and co-founder of Amboss, a data analytics firm specializing in the Lightning Network. Shrader emphasized the fundamental role of Bitcoin as “better money,” while characterizing Ethereum as a platform marked by complexity, with risks associated with smart contracts and critical hard fork protocol changes potentially diluting its primary purpose. However, experts have raised concerns about the interpretation of Glassnode’s data and the conclusions drawn from it.
Implications of the activities on digital assets
Kunal Goel, a senior research analyst at Messari, questioned whether the chart accurately accounts for staking activities in the Ethereum network. He pointed out that transfers to a staking contract may appear as selling on the blockchain but do not constitute actual sales. Presently, Ethereum’s staking mechanism requires users to lock or pledge 32 ETH in a smart contract to aid the blockchain in validating transactions. This requirement is believed to be a driving factor behind the perceived reduction in holdings by large Ethereum holders. Goel also emphasized that while the substantial difference in dollar amounts between major holders is noteworthy, it is crucial to ensure that the data is interpreted correctly.
André Dragosch, the head of research at Deutsche Digital Assets (DDA), a crypto asset management firm, echoed Goel’s sentiments. He referred to the situation as “a non-issue,” highlighting that the percentage of ETH supply locked in smart contracts has been steadily increasing. On Twitter, Dragosch pointed out that Glassnode’s metrics do not consider Ether held in smart contracts when evaluating the holdings of Ethereum whales. He added that the percentage of ETH supply held by the top 1% of addresses has not decreased at all. In essence, while the initial data may appear to suggest one narrative, it reveals a different story upon closer examination.
