Bitcoin holders have been steadily holding on to their coins in recent months, with whales doubling their holdings despite the uncertainty surrounding Bitcoin’s future projection. On the other hand, Ethereum whales, the largest holders of the second-largest cryptocurrency, appear to be on a different trajectory, as they have been selling off their holdings in recent years.
Data from on-chain analytics firms show that Bitcoin whales, defined as holders with 1000 BTC or more, have been accumulating more BTC since 2018. However, there have been occasional sell-offs during extended bear markets or after strong bullish uptrends when profit-taking occurs.
In contrast, Ethereum whales with more than 1,000 ETH have been selling since the same period. A research analyst for Cryptoslate named James Straten shared a correlation between the whales of Bitcoin and Ethereum, pointing out that while Bitcoin whales hoard their coins, Ethereum whales seem to be offloading their holdings.
On-chain data confirms this trend, showing that ETH whales have sold off 20 million ETH since 2022, with 12 million ETH being sold off this year alone. This sell-off by Ethereum whales is a stark contrast to the behavior of Bitcoin whales, highlighting the differing sentiments among large holders of the two cryptocurrencies.
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There could be a possible explanation for this divergent whale activity. While the amount of ETH held by whales might indicate that they have sold or moved their funds to other cryptocurrencies, a more plausible possibility is that these whales have transferred their ETH into Ethereum smart contracts. Since the launch of Ethereum version 2.0 in December 2020, the number of tokens in the staking protocol has significantly increased.
ETH 2.0 requires validators to stake 32 ETH in its deposit contract to validate transactions on the Ethereum blockchain. Currently, the deposit contract holds 31.2 million ETH, worth $48.6 billion, indicating a significant portion of the supply has been locked in smart contracts. This aligns with on-chain data that shows the supply tied in smart contracts overtaking the supply in addresses holding 1000+ ETH in late 2020.
This correlation between ETH tied in smart contracts and the sell-off by Ethereum whales was shared by crypto research analyst André Dragosch. He pointed out that the Glassnode data, which tracks whale supply, does not consider the ETH locked in smart contracts.
Despite the sell-off by Ethereum whales, the Ethereum blockchain continues to solidify its position as the leader in smart contracts, with a market dominance of 17.8% over the entire cryptocurrency market. Unlike Bitcoin whales who primarily hold their coins, bullish ETH whales are not just HODLing but actively employing techniques to maximize their gains from the cryptocurrency.
At the time of writing, Ethereum is trading at $1,557, but a recently failed bullish pattern formation could potentially send the price of ETH falling below $1,000. However, it is important to note that cryptocurrency markets are highly volatile, and prices can fluctuate rapidly.
In conclusion, while Bitcoin whales have been accumulating more BTC, Ethereum whales have been selling off their ETH holdings. The sell-off by Ethereum whales may be related to the transfer of funds into smart contracts rather than a loss of confidence in the cryptocurrency. The strong presence of ETH in smart contracts highlights the growing prominence of Ethereum as the leader in smart contract technology.
