On-Chain Analysis Shows Who Has Been Buying the Last Dump: IntoTheBlock

On-Chain Analysis Shows Who Has Been Buying the Last Dump: IntoTheBlock

4 months ago

Distribution from large holders continues as long term supporters accumulate.

On-Chain Analysis Shows Who Has Been Buying the Last Dump: IntoTheBlock

IntoTheBlock brings you on-chain analysis of top news stories in the crypto space. Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the major developments in the industry.

Since early November when ETH reached its all-time highs, its price has dropped a total of 56% to the lows seen last week. Now that the price is slowly bouncing up and seems to be  stabilizing, it is interesting to study which kind of investors have been buying the dip. On-chain analysis allows us to dissect which addresses have been purchasing ETH, their balance and for how long they have been holding.

The first indicator useful for this matter is the Balance by Time Held indicator. It divides the total supply in three groups of addresses depending on how long they have been holding their ETH.
The indicator shows how — in the recent price correction — those that have been holding for more than one year (called hodlers) are those that have been accumulating the most ETH, with a total of 52.39M ETH accumulated so far. This is the group with the biggest balance of ETH, which now accounts for 44.51% total amount of addresses with ETH balance.

Cruisers (those who have been holding from one month to 12 months) are 40.69% of the total. The most speculative group known as traders (holding ETH for just one month) is the minor group, with just 14.80% of the addresses.

As of Feb. 6, 2022 via ETH IntoTheBlock Time Held indicators.

In a period of just 30 days, the addresses considered as hodlers have increased by 8.20%. These new hodlers mostly came from a reduction of the group of cruisers,who are now 8.14% less in the proportion of total addresses with a positive balance. This metric shows how long-term supporters of the ETH ecosystem take advantage of price corrections to continue accumulating more ETH and increasing their balance, as has happened during these years several times.

It is equally interesting to classify the purchasing power of the group that has been accumulating the most ETH in this price dump. The Balance by Holdings indicator, instead of counting addresses, counts the balance that each address has. In this way, the total amount of ETH can be classified in several groups depending on how much ETH they are holding.

In this case, the first group is the one whose addresses have between 0 to 0.01 ETH. The grouping continues with those with 0.01 to 0.1 ETH. This grouping method is iterated over several groups until those addresses with up to 100K to 1M ETH are categorized.

As of Feb. 6, 2022 via ETH IntoTheBlock ownership indicators.

The green highlights those groups that have been accumulating during these last 30 days. Notably, addresses with balance up to 100 ETH have been increasing their balance the most.

The group with 1 to 10 ETH has been the most predominant, but also other “whale” groups like those addresses with more than 1M ETH or the group with balance between 10k and 100K ETH have been simultaneously accumulating. This transfer has been at the expense of other groups, marked in red.

It is highly interesting that most of the wallets with the largest balances continue to decrease their balance in distribution phases. The decentralization from large holders towards smaller holders is happening slowly over time, repeating Bitcoin’s steps. These distribution phases can be considered net positive for the coin in the long term, as the more distributed the supply, the less dependent the market is on single whale movements.

As can be seen in the next matrix, the majority of the supply of ETH is concentrated in addresses with large balances:

As of Feb. 6, 2022 via ETH IntoTheBlock ownership indicators.

The most wealthy groups each control more than 20% of the supply each. While it is a high amount, it is expected that these percentages will decrease over time, while groups with lower balances continue supporting Ethereum and purchasing more coins. As well, new investors are attracted towards the benefits and returns of a decentralized and permissionless economic system based on programmable money and smart contracts.

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