Ethereum: Is it Wise to Track ETH Whales as Exchange Balances Reach Record Lows?

Ethereum (ETH) exchange balances have recently hit a new low, indicating a potential upcoming supply shortage for the leading altcoin in the world. Despite a recent market downturn, ETH whales have been increasing their accumulation, as noted by on-chain analyst Leon Waidmann.

The decline in the percentage of Ethereum balance to 10% as of August 10 translates to approximately 12 million ETH on exchanges, showcasing a diminishing supply trend that could pave the way for a surge in ETH prices. This drop signifies a record low in available ETH supply on centralized exchanges, suggesting that investors are transferring their ETH holdings away from centralized exchanges for purposes of accumulation or self-custody.

This development is generally viewed as a positive indicator for ETH, as it could potentially bolster the coin’s value. Additionally, the surge in Ethereum’s network effects has been notable. Following a rebound from price lows of $2.1k on August 5, ETH active addresses surged by over 130K, climbing from 440K to 571K by August 10. During the same period, new addresses also saw a significant increase of over 60K, highlighting robust growth in the Ethereum network.

However, demand for ETH from US investors via ETFs showed mixed results, particularly in terms of ETH ETF flows. Positive flows of $48.7 million and $98 million were observed on Monday and Tuesday of last week, indicating a swift response to market dips. Nevertheless, ETFs experienced a negative streak from Wednesday to Friday, with total outflows amounting to $42 million.

On the price charts, ETH’s recovery has been substantial, with a nearly 30% increase from $2.1K to over $2.6K at the time of reporting. While ETH managed to reclaim the crucial $2.5K level, the previous range-lows at $2.9K remained untested and unreclaimed. As such, monitoring the range lows is crucial to gauge the potential extension of the recovery into the upcoming week. Any retracement of the recovery gains could prompt bulls to defend the $2.5K level.

In conclusion, the recent drop in ETH exchange balances, coupled with the increase in whale accumulation and network activity, suggests a positive outlook for Ethereum’s price trajectory. Investors will likely closely monitor these developments to assess the potential impact on ETH’s value moving forward.