Small Ethereum investors increase exposure as ETH loses $4K level

After hitting an all-time high at $4,867 on Nov. 10, Ethereum’s native currency, Ether (ETH), has lost almost 18% and is presently trading near $3,900. Nonetheless, the price drop hasn’t discouraged small-scale investors from purchasing the coin.

The number of Ether addresses holding less than or equal to 0.01 ETH reached a record high of 19.95 million on Dec. 4, according to data obtained by Glassnode, a blockchain analytics company, on the day ETH plunged to as low as $3,575.

Despite Ether’s drop from $4,867 to $3,575, the number of Ethereum wallets with balances of at least 0.1 ETH continued to rise, finally reaching a new all-time high of 6.37 million on Dec. 12.

As a consequence, on December 12, the number of Ether addresses having a non-zero balance hit a new high of approximately 70 million. Addresses with less than or equal to 1 ETH, on the other hand, fell in lockstep with prices, showing that they were less interested in buying Ether’s sessional declines.

Bounce ahead?

As the price of Ether falls approaching a support confluence, the army of ordinary investors buying Ether in modest numbers marches on.

In a selloff sparked by comparable corrections across the cryptocurrency industry, Ether fell over 5% to approximately $3,900 on Monday. Nonetheless, the price of ETH has just reached a level that has attracted purchasers.

The lower trendline of the descending channel pattern — the blackened range on the chart above — provided the initial support. Meanwhile, Ether’s ability to retrace upward in the near term has been enhanced by the purpled 100-day simple moving average (100-day SMA) and the red retreat region — as it has been since Oct. 20.

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While smaller retail investors appear to be amassing Ether, their bigger counterparts appear to be torn.

Glassnode data, for example, reveals a slight increase in purchasing interest among Ethereum wallets with balances of at least 1,000 ETH. Nonetheless, their numbers have fallen from about 7,200 in 2017 to below 6,350 in 2021.

Exchanges’ Ether balances

A smaller ETH balance across exchanges indicates that traders want to keep their coins or stake them in decentralized finance (DeFi) project pools to earn returns rather than exchanging them for other assets.

“However, Ethereum’s supremacy over DeFi activities took a major damage in H2 2021,” Delphi Digital, a crypto-focused investment business, pointed out, adding that:

“As the multi-chain story unfolds, money is flowing into ecosystems like Solana, Terra, and Avalanche.”
Investors have been looking for possible “Ethereum killers” due to high gas costs.

Ether’s falling holdings across all crypto exchanges provide further positive signals.

Since Dec. 9 — which corresponded with an approximately 10.50 percent price decline — the quantity of coins held by exchanges has rebounded from over 14 million ETH to 14.13 million ETH, but the long-term trend remains biassed to the downward.

A smaller ETH balance across exchanges indicates that traders want to keep their coins or stake them in decentralized finance (Defi) project pools to earn returns rather than exchanging them for other assets.

A decentralized exchange swap, for example, costs $70 on Ethereum but $1 on Terra and Solana, despite the fact that some experts believe Ethereum’s full move from proof-of-work to proof-of-stake next year would alleviate the high gas problem.

“Because of the switch to proof-of-stake, Ethereum’s price will climb far quicker than Bitcoin’s,” said Tom Higgins, CEO of asset management platform Gold-i.