Ethereum Whales Retreat Amidst Sharp Price Drop: Analyzing ETH's Market Dynamics

2024-09-11, 03:09

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![](https://gimg2.gateimg.com/image/article/17260237851692587449analysis.jpeg)
## [TL; DR] 
During August the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum price</a> fell by around 20%.

ETH is still within a bearish period that is in alignment with the rest of the <a href="/price" target="_blank" class="blog_inner_link">crypto market</a>.

Day trading and the hodling strategies are suitable during periods of high price volatility.

## Introduction 
The current crypto market wide downturn has affected many cryptocurrencies including <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">bitcoin</a> and ETH. As the market matures most of these assets seem to have strong correlations, a reason why their prices tend to move in the same directions. In recent weeks Ether (ETH), like many other crypto assets, was in a downtrend. This analysis looks at factors that might have contributed to ETH’s downward trend.

## Ethereum's Price Plunge: A Detailed Look
During August <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> experienced a sharp decline. Its price dropped by 20%. As a result, by the end of August [ETH was priced at around $2,551](https://www.gate.io/price/ethereum-eth "ETH was priced at around $2,551"). Its strong price decrease has greatly affected the number of ETH wallets which are in profit. Despite this poor performance ETH started the year at a strong footing. Its value grew by about 70% within the first six months. As a result, its price came closer to its all-time high of $4,300, attained in 2021.

Due to the downturn there was a reduction in ETH trading volume. As a result of the altcoin’s double-digit price decline some investors who included ETH whales changed their Ethereum investment strategy. For example, the whales reduced their trading activity to minimize losses. Data on IntoTheBlock shows that there was a drop in the daily ETH large transactions. For instance, the transactions valued between $1 million and $10 million decreased by about 5% during the month. Also, due to the negative market sentiment, there was a 45% decline in the daily count of larger transactions valued above $10 million. The following graph shows the changes that occurred in ETH whale activity due to the bearish trend.
![](https://gimg2.gateimg.com/image/article/17260239511.jpg)
Ethereum Transaction Count: IntoTheBlock

The netflow of large holders for Ethereum (ETH) dropped by around 70% within that period. The whales or large holders are digital wallets that hold at least 0.1% of the asset’s circulating supply. On the other hand, the large holders’ netflow is a metric that measures the difference between the amount of ETH that the large holders buy and the quantity they sell. The next image shows ETH large holders’ netflow for the period. 
![](https://gimg2.gateimg.com/image/article/17260239692.jpg)
Ethereum Large Holders Netflow: IntoTheBlock

As observed on <a href="/price/the-graph-grt" target="_blank" class="blog_inner_link">the graph</a>, there was a fall on the Ethereum Large Holders Netflow. A decrease in the metric shows distribution which is a bearish signal. Such a development also results in negative market sentiment. On the other hand, a rise in the Large Holders Netflow is a bullish signal.

## Ethereum Market Analysis: Factors leading to Ethereum's over 20% Price Drop 
The 20% Ethereum price drop was not a result of the market wide slump alone. Several other factors contributed to its price fall. For example, during August there was a market concern that rising inflation in the United States might have resulted in another round of interest rate hikes which could have negatively impacted cryptocurrencies. That assumption dampened investor interest in ETH and other digital currencies. The launch of spot Ethereum ETFs in the United States led to a "sell-the-news" reaction which resulted in the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">ETH price</a> drop. These factors alongside the declining network activity created much bearish pressure.

The other major reason that might have heavily impacted the price of ETH was the relocation of funds to other digital assets. The Ethereum whales could have invested in other assets such as RCO Finance (RCOF) and FET, which have attracted the interest of many crypto investors. Usually, large crypto investors invest their smart money in promising projects. For example, RCO Finance (RCOF)’s cutting edge blockchain technology has caught the attention of many investors in the <a href="/price" target="_blank" class="blog_inner_link">cryptocurrency market</a>.

RCOF is a trading platform that uses artificial intelligence and blockchain technology. It has over 120,000 assets in various classes. Many traders invest with RCOF since it offers different essential services such as AI-powered Robo advisor. This feature leverages machine learning and AI to give investors personalized and data driven investment advice based on their financial goals and risk tolerance. Some ETH investors might have been attracted by Fetch.ai’s FET’s recent gains. As a result, they might have pulled some of their funds from ETH to FET.

## ETH Price Prediction: Bearish Trends Ahead
Several technical indicators confirm that [Ethereum bearish trend may continue](https://www.gate.io/price-prediction/ethereum-eth "Ethereum bearish trend may continue") unless there is a strong catalyst to stimulate the cryptocurrency market to rally. On its one day chart for 29 August a Parabolic Stop and Reverse (SAR) indicated that the ETH price would fall. This is because its dots were above the ETH price line. Basically, the Parabolic Stop and Reverse is an indicator that identifies the potential direction the price of an asset may take.

On the same day Ethereum’s Moving Average Convergence Divergence (MACD) showed that the bearish momentum would continue. This is because the MACD line was falling down and was about to cross below the signal line (orange). The following graph shows ETH’s parabolic SAR and [MACD indicator](https://www.gate.io/learn/articles/madc-indicator-explained/433 "MACD indicator") signals.
![](https://gimg2.gateimg.com/image/article/17260240663.jpg)
Ethereum Price Analysis: TradingView

At that time, there was a possibility that the ETH price would drop towards $2,112. However, a rise in buyer activity would push the Ethereum price to around $2,867. Although at the time of writing the ETH price has risen to $2,291 it is still within a strong bearish zone.

## Strategies for Ethereum Investors amidst Volatility
Price volatility within the cryptocurrency market is continuing. Therefore, crypto investors should use appropriate investment strategies supported by the right technical indication. There are several strategies which investors can adopt.

Buy and Hold Strategy: This is a very popular strategy among crypto investors. With this approach they <a href="/crypto/buy/ethereum-eth" target="_blank" class="blog_inner_link">buy ETH</a> and hold it for a long period, waiting for its value to rise. The investors will sell the asset when it reaches a certain price level. They are not concerned with short-term price changes.

Day Trading: This is a short-term investment strategy where the [investor buys ETH](https://www.gate.io/how-to-buy/ethereum-eth "investor buys ETH") and sells it within the same day. They use technical analysis to forecast the asset’s price movement. This strategy works well during highly volatile periods since it is easier to predict short-term price changes.

## Conclusion 
The Ethereum price has been fluctuating rapidly for the past several months. However, in August it experienced a very sharp drop which forced some large-scale ETH holders to close their positions. At present ETH is still in a bearish setup. Day trading and the "buy and hodl” strategies are suitable trading strategies during periods of high price volatility.

<div class="blog-details-info">
<div>Author: Mashell C., Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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