The dropping share of Ethereum (ETH) held by whale addresses since the Shapella upgrade in mid-April has spurred speculation about the sentiments of large investors. Data from Glassnode reveals that ETH held by addresses containing 1,000-10,000 ETH fell to 14.033 million on May 1, compared to 14.167 million on April 12 when the upgrade went live. Interestingly, this cohort had held 14.303 million ETH a week before the upgrade, indicating a potential bearish leaning among large investors.
This observation does not spell good news for ETH prices as fewer Ethereum whales generally signal heightened downside risk. Historically, whale activity acts as a leading market indicator, with accumulation often preceding price increases and vice versa. However, a shift occurred in March 2020, and despite the declining number of whales, ETH prices rallied from $110 to over $4,950 in November 2021. The inverse correlation continued until an uptick in whale holdings was observed, coinciding with ETH prices doubling to around $1,850.
As for other address cohorts, including sharks (100-1,000 ETH), fishes (10-100 ETH), crabs (1-10 ETH), and even mega-whales (10,000+ ETH), a decline was observed. The only accumulators during this period were shrimps (<1 ETH) as their net position increased slightly from 1.79 million on April 12 to 1.80 million on May 1. One notable effect of the Shapella upgrade was the ability for investors to withdraw the ETH locked through staking. Some predicted that this feature would increase selling pressure. Since the upgrade, over 1.97 million ETH (worth approximately $3.6 billion) has been withdrawn, although no significant changes in cryptocurrency exchanges' ETH balances have been observed. The crucial factor to consider now is the next direction of ETH prices. Bulls have made multiple unsuccessful attempts to breach the important psychological resistance level of $2,000. If ETH successfully rebounds from its current position above the short-term support provided by its 50-day exponential moving average (near $1,840), it opens up the next upside target range of $2,000-$2,125 in Q2. However, breaking below the 50-day EMA could lead to a downward spiral towards the 200-day EMA (near $1,670), a drop of around 10% from current price levels. Source: Cointelegraph
