Researchers infer that Ethereum whales seem to be choosing to reduce their holdings to buy more Bitcoin.

Although the price of Ethereum (ETH) has risen by nearly 50% so far this year, the number of addresses holding large amounts of Ethereum has decreased significantly compared to the beginning of the year. At the same time, the number of addresses holding large amounts of Bitcoin has increased during the same period. Some researchers speculate that Ethereum whales seem to have converted their Ethereum holdings into Bitcoin.

Large Holders Reduce ETH Holdings in Exchange for BTC

According to data from Glassnode, the number of addresses holding over 10,000 ETH (Glassnode's definition of large holders excludes contract addresses) dropped to 1,050 on May 14. This figure marks a new low since January 2019. It represents a nearly 6% decrease from the peak of 1,115 in December, indicating that Ethereum whales are offloading their ETH holdings.

Cryptocurrency researcher Connor Abendschein commented:

"Due to the impact of the halving of mining rewards, some Ethereum whales may have converted their assets into BTC in hopes of gaining a larger potential price appreciation."

Meanwhile, the 7-day moving average of the number of addresses holding over 10,000 bitcoins rose to 111 (as of April), marking the highest level since August 2019. The speculation surrounding Bitcoin's third halving has been strong, with the event being a focal point of market discussions in recent months. Following a drop to $3,867 on March 12, Bitcoin quickly recovered to $7,000 within five days, further reinforcing bullish expectations and investor confidence. This is likely the main driving factor behind Ethereum whales converting ETH to BTC before the halving. Data from Glassnode's metrics shows a 5% surge in BTC large addresses in March, while Ethereum large addresses are on a downward trend, further supporting this argument.

Growth of DeFi as a Potential Factor

Another possible factor leading to the sharp decline in Ethereum whale addresses is the increasing interest of investors in decentralized finance (DeFi) services. Ashish Singhal, founder of cryptocurrency exchange CoinSwitch.co, stated:

"Address owners may have moved most of their ETH holdings into various DeFi smart contracts that support lending to earn more profits."

The amount of ETH locked in DeFi reached a historical high of 3.23 million in February, currently reduced to 2.65 million, showing a 28% increase compared to the same period last year.

Spike in ETH Retail Holder Numbers

On the other hand, the decrease in large addresses contrasts sharply with the trend in the number of addresses holding 32 or more ETH.

The 7-day average of addresses holding 32 or more ETH hit a record high on Wednesday, reaching 114,625, up over 4% year-to-date. Ashish Singhal stated:

"The price increase may be attributed to bullish sentiment following the launch of ETH 2.0."

As investors can choose to stake 32 ETH as an Ethereum validation node to earn additional passive income once Ethereum transitions from Proof of Work (PoW) to Proof of Stake (PoS) mechanism in the future.

Related Reading

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• Bitcoin's Annual On-Chain Transaction Volume Approaches Nearly $4 Trillion "Whales" in Dormant Period | 2019 Bitcoin On-Chain Data Review (Part 1)

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