Large holders withdrew their funds before the launch of the Ethereum ETF

The market has been bracing for volatility ahead of the launch of eth spot ETFs in the US today. While eth’s price action has been relatively uninteresting over the past few weeks, it seems that large holders are expecting price swings and are rushing to withdraw their funds.

Glassnode data on realized profits by ethereum holders shows a dramatic increase from $144.598 million on July 21 to $747.311 million on July 22. This is a significant increase and the highest realized profit in over 40 days.

<img class="size-full wp-image-434566" src="https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit.png” alt=”eth realized profit” srcset=”https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit.png 1800w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-300×169.png 300w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-1024×576.png 1024w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-768×432.png 768w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-1536×864.png 1536w” />

Such a high spike warrants a close examination of the wallet sizes and holding periods involved in the sell-off. The data shows that wallets holding between 10,000 and 100,000 eth made $626.982 million in profits on July 22, up from $35.744 million the day before. This indicates that large holders, most likely institutional players or high-net-worth individuals, are pulling their money out ahead of the ETF launch.

<img class="wp-image-434564 size-full" src="https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-wallet-size.png” alt=”Profit obtained by wallet size” srcset=”https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-wallet-size.png 1800w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-wallet-size-300×169.png 300w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-wallet-size-1024×576.png 1024w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-wallet-size-768×432.png 768w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-wallet-size-1536×864.png 1536w” />

Additionally, long-term holders were primarily responsible for the significant increase in realized profits. Profits from wallets that held eth for more than a year increased from $92.751 billion to $666.227 billion. This behavior aligns with a strategic move to lock in profits ahead of potential market volatility associated with the ETF launch.

<img class="wp-image-434562 size-full" src="https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-lth-sth.png” alt=”eth profit made by lth algo” srcset=”https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-lth-sth.png 1800w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-lth-sth-300×169.png 300w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-lth-sth-1024×576.png 1024w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-lth-sth-768×432.png 768w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-lth-sth-1536×864.png 1536w” />

Looking at realized gains by holding age, the most significant increase is seen in the 6- to 12-month holding age category, with realized gains increasing from $3.964 billion to $577.677 billion. This suggests that holders from mid-2023 onwards are locking in their gains.

<img class="size-full wp-image-434558" src="https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-age.png” alt=”eth realized benefit by age” srcset=”https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-age.png 1800w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-age-300×169.png 300w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-age-1024×576.png 1024w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-age-768×432.png 768w, https://cryptoslate.com/wp-content/uploads/2024/07/eth-realized-profit-by-age-1536×864.png 1536w” />

The rise in realized gains highlights the market’s caution towards the changes anticipated with the arrival of spot eth ETFs. As trading heats up, we can expect more realized gains in the coming weeks. CryptoSlate previously reported that pre-market trading of eth ETFs has already generated significant interest, showing that the market is positioning itself for all the potential opportunities and risks associated with the new ETFs.

It is also possible for large institutional holders of ethereum to realize profits and reinvest them into eth ETFs rather than holding spot eth directly. For institutional investors and high net worth individuals, regulatory oversight and transparency of ETFs can reduce the risks associated with holding eth directly. Another significant benefit is the simplified tax reporting associated with ETFs. In many jurisdictions, ETFs are treated more favorably for tax purposes than direct holding of the underlying assets. This can translate into more efficient tax management for investors, especially with large asset volumes.

Liquidity is another critical factor. ETFs trade on traditional exchanges, which tend to offer better liquidity and easier transaction settlement. For large holders, the ability to quickly liquidate eth positions without significantly impacting the market price could be a substantial advantage.

Large holders withdrew their funds ahead of ethereum ETF launch appeared first on CryptoSlate.