Ethereum Wealth Transfers to ‘Whales’ as Smaller Wallets Liquidate Holdings

The concentration of Ethereum held by large investors, often referred to as “whales,” has been on the rise, highlighting a significant shift in wealth distribution within the market. As of October 18, 2023, investors with holdings exceeding one million ETH controlled 32.2% of the total supply—an unprecedented level since 2016, according to data from Santiment. This increased concentration has occurred alongside a spike in transaction activity and a slight price increase of less than 1% for Ethereum.

Despite notable price volatility in mid-October, during which ETH experienced both gains and losses of over 2%, these affluent investors have been actively accumulating more assets. The heightened activity among whales aligns with the recent transactions, which reached the second-highest volume in five weeks, coinciding with significant price movements around October 1 and 2.

Conversely, smaller wallets holding between 1,000 and 100,000 ETH have been decreasing their share, choosing to sell off their holdings as Ethereum prices dipped to approximately $1,560. This trend of reduced distribution among smaller wallet tiers correlates with an uptick in whale transaction volume.

Interestingly, this pattern contrasts with reports from Glassnode, which indicated that these whales have been offloading their ETH since 2020, leading to sales totaling about $20 million. CoinMarketCap also suggests that larger holders have mostly retained their assets during this period.

In terms of staking, Ethereum remains strong, with a record 27.6 million ETH staked—around 23% of the total supply. Following the network’s transition known as The Merge last September, the total supply has decreased by 260,640 ETH, equating to approximately $409 million.

Despite these promising staking numbers and the deflationary trend in Ethereum’s supply, the cryptocurrency’s price continues to decline, mirroring the performance of other altcoins. It fell another 1.3% on the latest trading day, resulting in a 4.5% drop over the past two weeks. Currently, Ethereum sits 68% below its all-time high, which underperforms compared to Bitcoin’s 59% decline from its peak.