Small Ethereum investors add exposure if ETH loses below the $ 4,000 level

Ethereum’s native token Ether (ETH) is down more than 18% after hitting an all-time high of $ 4,867 on Nov. 10, and is currently trading near $ 3,900. However, the decline hasn’t stopped retail investors from buying small amounts of the token.

According to data collected by Glassnode (a blockchain analytics platform), the number of Ether addresses with less than or equal to 0.01 ETH reached a record high of 19.95 million on December 4th. on the day ETH fell to $ 3,575 (Coinbase data).

Ethereum addresses with credit less than or equal to 0.01 ETH. Source: Glassnode

Meanwhile, the amount of Ethereum with balances of at least 0.1 ETH also continued to rise, although the price of Ether had risen from $ 4.867 to $ 3.575, finally hitting a new all-time high of 6.37 million on December 12th.

Small Ethereum investors add exposure if ETH loses below the $ 4,000 level
Small Ethereum investors add exposure if ETH loses below the $ 4,000 level

As a result, the number of non-zero Ether addresses hit a new record of nearly 70 million on December 12th. In contrast, addresses less than or equal to 1 ETH fell along with the price of the token, suggesting that they were less interested in buying Ether’s decline.

Ethereum addresses with credit less than or equal to 1 ETH. Source: Glassnode

Is there a rebound coming?

The number of retail investors buying Ether in small quantities is increasing as the price of ETH falls towards confluent support.

Notably, Ether plunged more than 5% to nearly $ 3,900 on Monday in a sell-off inspired by similar corrections across the cryptocurrency space. However, the price of ETH reached a zone that has been attracting buyers lately.

ETH / USD daily chart with support confluence. Source: TradingView

The initial support came from the lower trendline of the descending channel pattern, the black area shown in the chart above. Meanwhile, the purple 100-day SMA and red retracement zone (as they have since October 20) increased the potential for ether to move higher in the short term.

While smaller retail investors appear to have been hoarding ethers, their larger counterparts appear to be in trouble.

Ethereum addresses with credit less than or equal to 1,000 ETH. Source: Glassnode

For example, data from Glassnode show a slight recovery in the buying interest of Ethereum wallets with a balance of at least 1,000 ETH. Overall, however, their number has fallen from around 7,200 to less than 6,350 in 2021.

Ether available on exchanges

Other bullish signals are coming from the decline in the amount of ether available on cryptocurrency exchanges.

The number of coins deposited on exchanges has increased from nearly 14 million ETH to 14.13 million ETH since Dec. 9, with a price decline of almost 10.50%, but the long-term trend remains skewed to bring it down.

Ethereum available on exchanges compared to ETH price. Source: Glassnode

A lesser amount of Ethereum available on exchanges suggests the owners’ intention to hoard their coins or lock them in the pools of decentralized finance projects (DeFi) for income instead of exchanging them for other assets.

According to Defi Llama, the Total Locked Value (TVL) in DeFi is at a new all-time high of over 250 billion US dollars. of that, Ethereum’s TVL was equivalent to over $ 180 billion.

Total value locked across Ethereum ecosystem. Source: Defi Lama

“However, Ethereum’s dominance over DeFi activity took a heavy blow in the second half of 2021.” recalled Delphi Digital, a cryptocurrency-focused investment firm, adding:

“As the multi-chain narrative has increased, capital has migrated into ecosystems like Solana, Terra, and Avalanche.”

High gas commissions were the main reason investors were looking for potential “Ethereum killers”.

For example, a simple trade on a decentralized exchange costs US $ 70 for Ethereum, but US $ 1 for Terra and Solana. However, some analysts believe that Ethereum’s full transition from Proof-of-Work to Proof-of-Stake would fix the high gas price issue next year.

“The price of Ethereum will rise much faster than that of Bitcoin due to the transition to the Proof of Stake”, said Tom Higgins, CEO of the wealth management platform Gold-i.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Every investment and trade carries a risk, you should do your own research when making a decision.

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