A CryptoQuant analyst highlighted increasing ETH holdings among long-term investors. However, other factors indicate ETH could witness turbulence.
Accumulation wallets, which have only bought and held but never withdrawn ETH, have seen an uptick in the amount of ETH they hold by 65%, or 19 million ETH, from January’s 11.5 million. That increase, coupled with the asset’s current price point, has taken ETH held in these assets to over $50 billion.
CryptoQuant analyst Burak Kesmeci mentioned, “The total amount of Ethereum in accumulation addresses surpassed 19 million as of October 18, 2024.” He also believes that the number will exceed 20 million by the end of the year.
Looking at accumulation wallets can let investors know how healthy an asset is. If long-term holders continue to hold and increase their stockpiles, it can be derived that investor confidence in the asset is high. Of course, that comes with the asset displaying robust price action with the potential to go even further.
Burak Kesmeci also mentioned why these wallets would add more ETH to their holdings and that ETH would generally witness larger adoption across the board. His reasoning stems from the approval of spot ETH ETFs earlier this year, which has given added legitimacy to the asset. “It’s no longer just for tech enthusiasts—institutions and individuals see it as a key part of the financial future,” he said.
Is Ether Facing Turbulence?
Data shows that spot ETH ETFs have witnessed net outflows of $467.3 million thus far. The broader Ethereum userbase also seems not to be too happy with the asset and the network at the moment, as the asset has become prone to inflation despite the network witnessing increased usage.
As users turn to the numerous layer-2s Ethereum’s ecosystem boasts, the amount of fees paid in ETH is decreasing. With the decrease, a part of the transaction fees on Ethereum, which is meant to be burnt, is not getting burnt at previous rates. The purpose of this burning mechanism within ETH’s fee payment model is to keep the asset deflationary. However, since that is not occurring as intended, the asset is becoming inflationary.
Another cause of concern for ETH supporters is the increased demand for the asset in leveraged futures positions. With a 12% increase observed within four weeks, traders and holders believe the asset’s price could drop, considering increasing leverage positions often signal price corrections.
