Ethereum’s native token Ether (ETH) is down more than 18% after setting an all-time high near $ 4,867 on November 10, and is currently trading near $ 3,900. However, the drop has not deterred retail investors from buying small amounts of the token.
According to data collected by Glassnode (a blockchain analytics platform), the number of Ether addresses owning less than or equal to 0.01 ETH reached a record high of 19.95 million on December 4, the day ETH fell to $ 3,575 (data from Coinbase).
Meanwhile, the amount of Ethereum with balances of at least 0.1 ETH also continued to rise despite the Ether price having gone from $ 4,867 to $ 3,575, finally reaching a new all-time high of 6.37 million on December 12.
As a result, the number of Ether addresses with a non-zero balance also hit a new high of nearly 70 million on December 12. In contrast, addresses that are less than or equal to 1 ETH fell along with the token’s price, indicating that they were less interested in buying Ether’s decline.
Is a rebound coming?
The number of retail investors buying Ether in small amounts is advancing as the price of ETH falls towards a confluence of support.
Notably, Ether plunged more than 5% to near $ 3,900 on Monday in a sell-off inspired by similar corrections across the cryptocurrency space. Nonetheless, the ETH price reached a zone that has been attracting buyers of late.
The first support came from the lower trend line of the descending channel pattern, the black range shown in the chart above. Meanwhile, the purple 100-day SMA (SMA) and the red retracement zone (as it has been since Oct 20) raised Ether’s potential to rally higher in the near term.
While small retail investors appear to have been hoarding Ether, their larger counterparts appear to be in trouble.
For example, data from Glassnode shows a marginal recovery in buying interest by Ethereum wallets with balances of at least 1,000 ETH. Still, overall, their numbers have dropped from around 7,200 to less than 6,350 in 2021.
Ether available on exchanges
More bullish signals come from the decline in the amount of Ether available on cryptocurrency exchanges.
The number of coins deposited on exchanges rebounded from nearly 14 million ETH to 14.13 million ETH since December 9, which coincided with a price drop of almost 10.50%, but its long-term trend remains skewed to lowers it.
A smaller amount of Ethereum available on exchanges indicates the intention of holders to hoard their coins or lock them in the pools of decentralized finance projects (DeFi) to generate income instead of exchanging them for other assets.
Total Locked Value (TVL) in DeFi stands at a new all-time high above $ 250 billion, according to data provided by Defi Llama, of which Ethereum’s TVL turned out to be over $ 180 billion.
“However, Ethereum’s dominance over DeFi activity has taken a severe hit in the second half of 2021,” recalled Delphi Digital, a cryptocurrency-focused investment firm, adding that:
“As the multi-chain narrative grows, capital has moved into ecosystems like Solana, Terra and Avalanche.”
High gas commissions have been the main reason that has led investors to search for potential “Ethereum killers.”
For example, a simple trade on a decentralized exchange costs $ 70 on Ethereum, but $ 1 on Terra and Solana. Although, some analysts anticipate that the full transition of Ethereum from proof of work to proof of stake next year would fix the problem of high gas prices.
“The price of Ethereum will rise at a much faster rate than that of Bitcoin, due to the passage to the proof of stake”, said Tom Higgins, CEO of asset management platform Gold-i.
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