Crypto

As ETH Falls Below $4000, Small Ethereum Investors Become More Exposed

As ETH Falls Below $4000, Small Ethereum Investors Become More Exposed

Despite an ongoing price adjustment, the number of Ethereum addresses holding less than 0.01 ETH and 0.1 ETH has been increasing since early last month, November.

After hitting an all-time high of around $4,867 on November 10, Ethereum’s native token, Ether (ETH), has lost almost 18% and is presently trading near $3,900. Nonetheless, the price drop hasn’t discouraged small-scale investors from purchasing the coin.

The number of Ether addresses holding less than or equal to 0.01 ETH reached a record high of 19.95 million on December 4, according to data obtained by Glassnode, a blockchain analytics media, on the day ETH plunged to as low as $3,575 per coin (data from Coinbase).

Despite Ethereum’s drop from $4,867 to $3,575, the number of Ethereum wallets with balances of at least 0.1 ETH continued to rise, finally reaching a new all-time high of 6.37 million on December 12.

As a result, on December 12, the number of Ethereum addresses having a non-zero balance hit a new high of approximately 70 million. Addresses with less than or equal to 1 ETH, on the other hand, dropped in lockstep with prices, showing that they were less interested in buying Ether’s sessional declines.

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As the price of Ethereum drops approaching a support confluence, the army of retail investors buying Ether in small quantities marches on.

In a selloff sparked by comparable corrections across the cryptocurrency industry, Ether fell over 5% to approximately $3,900 on Monday. Nonetheless, the price of ETH has just reached a level that has attracted buyers.

The lower trendline of the descending channel pattern — the blackened range on the chart above — provided the first support. Meanwhile, Ether’s ability to retrace upward in the near term has been enhanced by the purpled 100-day simple moving average (100-day SMA) and the red retreat area — as it has been since Oct. 20.

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While smaller retail investors appear to be amassing Ether, their larger counterparts appear to be torn.

Glassnode data, for example, reveals a slight increase in buying interest among Ethereum wallets with balances of at least 1,000 ETH. Nonetheless, their numbers have fallen from near 7,200 in 2017 to below 6,350 in 2021.

Ether balances on exchanges

Ether’s falling balances across all crypto exchanges provide more positive signals.

Since Dec. 9 — which coincided with an almost 10.50 percent price decline — the quantity of coins held by exchanges has rebounded from over 14 million ETH to 14.13 million ETH, but the long-term trend remains biased to the downside.

A smaller ETH balance across exchanges indicates that traders intend to keep their coins or stake them in decentralized finance (DeFi) project pools to earn returns rather than exchanging them for other assets.

According to data given by Defi Llama, DeFi’s total value locked (TVL) has surpassed $250 billion for the first time, with Ethereum’s TVL exceeding $180 billion.

“However, Ethereum’s supremacy over DeFi activities took a big damage in H2 2021,” Delphi Digital, a crypto-focused investment business, pointed out, adding that:

“As the multi-chain story unfolds, money is flowing into ecosystems like Solana, Terra, and Avalanche.”

Investors have been looking for possible “Ethereum killers” due to high gas costs.

A decentralized exchange swap, for example, costs $70 on Ether but $1 on Terra and Solana, even though some analysts believe Ethereum’s full move from proof-of-work to proof-of-stake next year will alleviate the high gas problem.

“Because of the switch to proof-of-stake, Ethereum’s price will climb far faster than Bitcoin’s,” said Tom Higgins, CEO of asset management platform Gold-i.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.