ethereum price managed to hold $2,200 support as cryptocurrency market slowdown intensified this week, on-chain signals highlight growing whale demand.
On January 22, the cryptocurrency market suffered significant bearish headwinds as bitcoin (btc) prices faltered below $40,000 for the first time in 50 days. As of press time on January 25, the global crypto market capitalization has dropped by 7%, with a valuation of $108.5 billion wiped out in the weekly period.
The 5% loss in ethereum (eth) price has maintained a relatively more resilient performance than the industry average between January 22 and 24.
ethereum Whale Activity Remains High Despite Downtrend
ethereum price has managed to keep losses below the 5% threshold this week, while bitcoin and the global crypto market capitalization declined by as much as 7%, respectively, before seeing a slight rebound. On-chain data trends suggest that the increasing level of whale trading activity recorded on the ethereum network this week has been instrumental to eth's resilient price performance.
Santiment's Whale transaction count metric tracks the daily number of transactions involving a particular cryptocurrency that exceed $100,000.
On January 23, ethereum's whale transaction count surpassed 1,190. A closer look at the chart below shows that this was the highest recorded since eth price hit a 20-month high of $2,690 on January 11.
Corporate entities are accumulating eth in significantly high volumes despite the broader market pullback. This could be attributed to investors and fund sponsors looking to acquire ethereum ahead of an impending eth spot ETF verdict.
During bear market trends, an increase in whale transactions positively impacts the price of a crypto asset in two main ways. First, it provides liquidity to the market, allowing bearish panic sellers to execute their trades at favorable prices. It also boosts confidence among small retailers.
These factors have played a vital role as eth struggles to stay above the $2,200 support level amid market-wide sell-offs this week.
ethereum Investors Opt for Long-Term Storage
Additionally, ethereum has also seen a steady decline in currency reserves this week, which could be related to increased whale activity.
Corporate entities and whales are known to be value investors who tend to hold their positions for longer periods. Unsurprisingly, increasing whale transaction volumes on the ethereum network in recent months have coincided with a rapid decline in supply deposited on exchanges.
At the beginning of the week of January 22, the ethereum supply on exchanges was 10.5 million eth. But interestingly, that figure dropped sharply to 10.4 eth on January 25.
Effectively, this means that investors have transferred 150,000 eth worth approximately $330 million from exchanges and trading platforms into long-term storage or staking contracts.
Despite bearish headwinds, ethereum supply on exchanges fell by 150,000 eth in the last four days, indicating a dominant preference for long-term holding and passive income sharing among current holders.
Notably, ethereum exchange supply has been in a downward trend since the Proof-of-Stake (PoS) transition in May 2023, a move that coincided with an extended period of bullish price trends.
eth Price Prediction: Can ethereum Price Stay Above $2000?
As the downward trend in currency supply persists, fewer eth coins are available to trade on spot markets. This appears to have slowed the selling pressure on ethereum this week relative to the broader altcoin market. Combined with the steady increase in whale transactions, ethereum price is well positioned to defend the $2,000 territory.
IntoTheBlock's money-in/money-out price data, which groups all existing eth holders by their entry prices, also affirms this stance.
It shows that 8.3 million addresses, the largest group of eth holders, had acquired 46.5 million eth at the maximum price of $2,078. If the price of ethereum falls towards $2,100, many of these holders could engage in frantic hedge buying to defend their positions and avoid falling into net loss positions. This could effectively trigger an instant ethereum price bounce.
On the upside, ethereum bulls could reverse the bearish pressure if it reclaims the $2,500 territory. But this seems unlikely within the current market dynamics. As seen above, a significant group of 3.7 million addresses had acquired 7.1 million eth at an average price of $2,400.
If they engage in slight profit-taking as prices break even, ethereum could fall into another correction phase.
