- The number of Ethereum ($ETH) accumulation addresses has increased by 7.5M since January.
- 74% of $ETH holders have held their investments for over a year, demonstrating a strong belief in its long-term potential.
- Bitcoin ($BTC) also saw a surge in open interest and whale transactions as it almost hit $70K.
CryptoQuant reports over 19M $ETH lies idle, up 7.5M since January. Some analysts suggest the number of $ETH in accumulation addresses will surpass 20M by year-end.
On the surface, this indicates investors are HODLing $ETH in anticipation of new heights.
But what drives this belief, and are there other reasons for such an increase? Let’s dig deeper.
Transparency: The Key to $ETH’s Growth
Data shows that 70% of $ETH holders are in profit and 29% are in loss. Long-term holders dominate at 74%, followed by mid-term holders at 23%. Only 3% of $ETH investors have held it for less than a month.
Although $ETH dipped 44% from its all-time high (ATH) recorded in November 2021, this year’s trend is bullish with a 69.85% increase.
$ETH’s strong performance over the years and continuous development of the underlying ecosystem make it appealing to risk-averse investors.
Besides, Vitalik Buterin’s active participation fosters a sense of community. Unlike anonymous or barely present project teams of networks like Monero and Bitcoin Cash, Buterin is engaged and transparent – perhaps, sometimes, a little too transparent.
In yesterday’s post, Buterin warned about potential Ethereum centralization. Just two entities, Beaver and Titan, created nearly 90% of new blocks this month.
Is this good news for the ecosystem? No. Does Buterin admitting the issue and aiming to solve it instill trust? Yes.
Namely, Buterin proposed capping the staking amount for a more even liquidity distribution and implementing a collaborative block creation model.
It’s easy to see how Buterin’s proactive stance nurtures investor confidence in Etherem’s future.
ETF Adoption Drives $ETH Accumulation
The point above is valid. But why did the spike in accumulation addresses happen now?
Growing $ETH ETF adoption is the most likely cause. Despite the lackluster performance of Grayscale’s ETF, other $ETH ETFs on the US stock market have seen significant inflows.
Traditional investors may view ETFs as less risky than holding $ETH directly, which encourages HODLing. On top of that, some use them as an inflation hedge. Amid the current economic uncertainty, crypto’s volatility (coupled with high dividend yields) is a feature, not a bug.
As a result, Bitwise $ETH ETFs saw nearly $2M inflows on October 18. The other eight ETFs lag behind with zero flows, including Grayscale with $4.3B and BlockRock with $1.15B in net assets.
$BTC Open Interest Hits Record High
Investors are equally hopeful about $BTC’s price action, as evident from the surge in open interest (OI). As $BTC approaches $70K, open interest in $BTC futures contracts hit a record $40B.
Open interest
Open interest refers to the total number of outstanding contracts for an asset. In the context of $BTC futures, open interest represents the total number of contracts that have not been settled.
The Chicago Mercantile Exchange (CME) recorded over 30% of the OI, Binance – 20.4%, and ByBit 15%.
High OI indicates investors are willing to take higher risks, speculating on an asset’s price and anticipating greater gains.
Whales followed the small fish. After a 1.6K $BTC outflow on October 17, $BTC saw over $14M inflows from large holders.
New whale wallets now hold merely 2M $BTC, an 813% increase since Q1 2024. Whether the interest comes from institutions or $BTC maximalists, it’s clear that large investors are bullish on crypto.
A New Bull Run?
Investors big and small are actively accumulating $BTC and $ETH. Is this an attempt to hedge against inflation, FOMO, or genuine belief in crypto’s potential?
Whatever the reason, this trend is likely to benefit the market.
References
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