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Even as large investors—commonly known in crypto slang as "whales"—offload big holdings, the price of Ethereum (ETH) has come back to life. After a period of market instability, the cryptocurrency saw its price dip below $2,500 but has since recovered and is now trading above $2,600. This rise is noteworthy given the substantial selling pressure from key players in the market, such as the Golem Network. At press time, ETH was trading at $2,627.42, a 1.70% surge from the intra-day low.
The magnitude of realized losses has decreased considerably during the last ten days, which is reviving investor confidence. The August market decline initially induced panic selling, with many ETH holders recording significant losses.
However, recent developments suggest a shift in sentiment with the Market Value to Realized Value (MVRV) ratio, indicating that Ethereum is entering an accumulation phase, which could drive further price gains.
While that is the current sentiment on Ethereum, the Golem Network has been exerting enormous selling pressure, actively reducing its holding of ETH in the last couple of weeks. Over the last fortnight, Golem has been actively liquidating its ETH holdings, amounting to roughly $21 million or 8,000 ETH.
The network received 820,000 ETH during Ethereum's initial coin offering in 2016 and seems to be strategically liquidating assets to strengthen future operations.
Golem dumped 4,000 ETH onto Coinbase and Binance on August 21, in one of several sales of comparable size the week before. After those rounds of dumps, Ethereum's price remains largely unscathed and strengthens. Golem's multi-sig wallet currently holds some 22,834 ETH, roughly $60 million. Further sales on the network could spell added volatility in the short term, but the market has, at this point, absorbed large transactions with little turmoil.
Recently, Ethereum has been consolidating previous price actions between $2,546 and $2,681. The coin has been languishing in sideways action over the past fortnight, so this now poses a moment of truth for ETH. The price action reflects that Ethereum is ready for a potential breakout any moment.
If ETH surpasses the resistance level at $2,930, its price could quickly rally towards $3,000, signalling a recovery from the losses incurred during the recent crash.
However, Ethereum may enter another consolidation phase above $2,681 if it fails to break this resistance. A longer sideways trajectory will weaken the current bullish trend, possibly leading to additional depreciation if major support areas are breached. Should this happen, the support level to set eyes on would be $2,100. The Relative Strength Index (RSI) rating of 52, however, suggests that the bullish momentum is in control; hence, the positive trend may persist.
Running parallel to the whale offloading, outflows in Ethereum spot Exchange-Traded Funds (ETFs) have been equally stable. According to SosoValue data, net outflows of $341.35 million were registered in the first week of trading for Ethereum ETFs. The second week showed a decrease, although it was still quite significant, with an outflow of $169.35 million, indicating a decline in investor interest. Even so, outflows aside, the Ethereum price has held well and even shows a capacity to recover.
Interestingly, in the third week, the ETFs saw their first positive inflow at $104.76 million; even with this inflow, the total net assets of Ethereum ETFs continued to decline, losing 13% of the value registered upon launch. The aggregate has seen the total net assets value of Ethereum spot ETFs drop from $9.24 billion to $7.28 billion. It reflects a broader cautious stance of the market toward ETH's near-term prospects.
Moreover, the number of new Ethereum addresses confirms a similar signal of a weakening network, which presumes an even bigger challenge of supporting long-term price recovery. On August 21, only 88.8k new addresses were registered, in contrast to 196.72k in May. The slowing down of the adoption rate of new users can, therefore, limit the upward momentum for ETH.
