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Large holders of Ethereum, also known as Ethereum whales, have come along for the ride an accumulation trend for some time now, with data on the chain revealing a fascinating increase in their collective holdings. Special, data from blockchain analytics company IntoTheBlock shows that Ethereum whales now control approximately 43% of the total circulating supply of ETH.
The imbalance in ETH ownership raises important questions about its size consequences for the price of Ethereum and market dynamics in the future.
Whale accumulations have increased by more than 90% since the start of 2023
According to IntoTheBlock, the total concentration of ETH is in whale addresses currently at 61.09 ETHwhich represents approximately 43% of the total supply. This marks a significant shift from early 2023, when whales controlled just 22% of Ethereum’s circulating supply. IntoTheBlock classifies whale addresses as those that hold more than 1% of the total circulating supply of ETH.
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The nearly doubling of Ethereum whale holdings in just one year is a remarkable development. Naturally, such a concentration of a large supply of cryptocurrency in a few wallets would spell doom for the asset, as it would mean that a few players could manipulate the price dynamics as they see fit. However, Ethereum’s case deviates from this narrative due to the unique nature of its ecosystem and recent structural shifts within the network since 2022.
The sharp increase in whale concentration can be attributed to two major factors: the Ethereum merger and the growing appeal of ETH staking to earn rewards. The Ethereum merger, which took place in 2022, changed the blockchain from a proof-of-work (PoW) system to a proof-of-stake (PoS) mechanism.
As such, in-depth data from IntoTheBlock, which shows that the 61.09 million ETH is concentrated in just three whale addresses, makes sense.
What this means is that this ETH is usually the ETH locked into the proof-of-stake staking algorithm used by block validators on the Ethereum network. By locking up their Ethereum, ETH miners and large holders have not only reduced the circulating supply but also contributed to the price increase by reducing the quantity Ethereum available for trading.
Ethereum Holder Dynamics – Investors and Retailers
The increase in ETH among whale addresses has resulted in less ETH available to investors and retail owners. IntoTheBlock classifies investors as addresses holding between 0.1% and 1% of the total circulating supply, while retail addresses are holding less than 0.1% of the total circulating supply.
At the time of writing, there are 42 investor addresses and they collectively own 15.2 million ETH, which translates to 10.77% of the total circulating supply. Keep in mind that the three whale addresses don’t do much to the price dynamics, but the investor addresses hold up significantly but more liquid portions of ETH have a greater ability to influence market movements. Any substantial sell-off from these investor addresses could cause a sharp drop in Ethereum’s price.
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On the other hand, retailers, who make up more than 99% of ETH addresses, are left with 46% of the total circulating supply. At the time of writing, Ethereum is trading at $3,225 and is down 2% in the last 24 hours.
Featured image from Pexels, chart from TradingView