Ethereum: On-chain outlook, Edition #3 (08/06/21)

Analysing what on-chain data reveal with regards to the recent corrections across the cryptocurrency market

Exchange Out-Flow

The team wanted to follow up on the Ethereum on-chain chart published a few weeks ago for today's on-chain edition.

Despite the recent choppy price action and bearish sentiment across the cryptocurrency market, there is still some glimmer of hope for bulls when considering the following on-chain metrics:

  1. Ethereum supply on exchanges continues to decrease (see red circle). Interestingly, despite the 10% price correction today, exchange supply has also dropped, coupled with some exchange outflow (consistent throughout the last two weeks)

  2. As expected, due to its inverse relationship with 'supply on exchanges', supply outside of exchanges continues to increase, indicating that long-term holders are adding to their holdings (see yellow circle)

  3. Daily active deposits into exchanges continue to decrease since the decline (see grey arrow)

Wallet Holdings

What we find particularly interesting is the supply distribution for more substantial Ethereum holders.

Despite the ongoing price correction, large wallet holders (i.e. 10k to 1 million coins) continue to remain stable with their holdings. On the other hand, smaller Ethereum holders (i.e. 100-10k coins) have declined, possibly indicating that smaller retail investors have been capitulating.

The reasons above may be macro bullish from an on-chain perspective, but it is still important to remember that BTC price action is king - and ultimately has the final say.

It will be interesting to see whether Ethereum holds or 'decouples' (some may argue it already has in some cases), especially if BTC drags to lower levels.

See you again for the next update.

- q

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