Key Takeaways
How is Ethereum’s price action doing?
Ethereum [ETH] declined by 10.9%, hitting a 5-month low of $2650 before recovering slightly.
What are the altcoin’s whales up to?
Ethereum whales bought the dip, accumulating $241.84 million worth of ETH.
With the broader crypto market on edge, altcoins, especially Ethereum, have faced intense downward pressure. In Q4, Ethereum [ETH] has traded within a descending channel, indicating sustained bearish pressure.
The world’s largest altcoin dropped by 10.9%, hitting a five-month low of $2650, before slightly rising to $2720 at press time.
Interestingly, this prolonged decline has created a buying window. Especially for whales and institutional investors.
Ethereum whales are aggressively buying the dip!
Significantly, with Ethereum trading at a 5-month low, whales have piled in to buy the altcoin at a discount. While Ethereum has fallen throughout November, whale activity has remained relatively high compared to previous months.
For example – Spot Average Order Sizes data from CryptoQuant revealed large whale orders over the past month.
Such sustained whale orders indicate an uptick in participation by large entities, especially whales, on both the demand and supply sides.
Source: Cryptoquant
Onchain Lens reported several such orders on the demand side. For starters, the “66,000 Borrowed Whale” further bought ETH worth $162.77 million from Binance and supplied it to Aave V3.
After this purchase, the whale increased his holdings to 432,718 ETH, valued at $1.23 billion. Three other whales bought 9974 ETH worth approximately $30 million, primarily from Binance.
Source: Onchain Lens
Finally, the last accumulating address was from Tom Lee’s Bitmine. In fact, Bitmine has added another 17,242 ETH, worth $49.07 million, from FalconX and BitGo.
In total, these holders have accumulated $241.84 million in ETH. Often, when high conviction buyers step in during a downtrend, they view the pullback as an opportunity.
To put it simply, whales are confident with future price appreciation, despite the recent correction.
What’s happening to Ethereum’s supply?
As whales accumulate, Ethereum supply on exchanges is becoming tight. According to CryptoQuant, Ethereum’s Exchange Reserves declined to a 55-month low of 15.6 million – Worth $42.9 billion.
Source: Cryptoquant
Such a sharp drop means that these whales have absorbed a significant share of the available supply. Often, low supply on exchanges results in a shrinking sell-side liquidity pool.
Historically, low sell-side liquidity has preceded higher prices. Especially as volatility tends to decline as supply shifts to stronger hands.
Is the demand enough to boost ETH?
Strangely, despite a hike in whale accumulation, the same is yet to have a positive impact on the price action. Especially as Ethereum remains structurally bearish.
On the price charts, downtrend momentum has continued to strengthen as evidenced by the Stochastic Momentum Index (SMI). In fact, the SMI dropped to -74.69, indicating strong seller dominance.
Source: TradingView
At the same time, the Advance-Decline Ratio (ADR) has remained below 1, further validating downside strength. Such market conditions might position ETH for more losses.
If the bearish trend persists, ETH could drop to $2535. However, if whale demand finally materialises, it will boost ETH and help it reclaim $3k in the short term.
