67 Interactions, 4 Today
The 7 September flash crash occurred at an inopportune time, as Ethereum was approaching the $4k price ceiling. The king altcoin has closed in the red for three days in a row at the time of writing. The timing is especially interesting in this case because it came after a 1.5-month surge. Was this flash crash, however, a blessing in disguise?
Many market participants believe that the flash fall was an excellent entry moment before the price began to rise again.
Notably, Ethereum seemed to be already embarking on a journey north, at least on the shorter timeframe. In fact, ETH was making higher lows at press time.
While ETH’s price was below the 20-week SMA on a one-day chart, on shorter timeframes, the same had been established as support again. But, what has been driving this recovery?
Whales pushing in
As the price took a downturn, notably, the top-10 ETH whale addresses skyrocketed in supply held over the past 15 weeks. They now own 21.38% of all ETH.
This is the largest amount held by them in around 51 months, as highlighted by Santiment. Whale accumulation is a good sign for the price action of the top altcoin.
Apart from that, whales have been rather active over the last week as the market corrected. According to Whale Alert, for instance, whales moved more than $1 billion in Ethereum across 21 separate transactions.
What’s more, an unknown wallet sent Binance a whopping 99,990 ETH on Tuesday, worth around $345 million. This was the largest of the tracked transactions over the last week.
ETH on a deflationary route?
Cryptocurrency’s deflationary systems have piqued the curiosity of economists due to a lack of such systems in the financial sector. However, concern about a deflationary currency system eventually leading to hoarding and liquidity issues has been around for a long time as well.
Given how successfully ETH held and recovered throughout this mini-crash, it will be fascinating to see if this was due to ETH turning deflationary.
This year presented a rather curious case as Ethereum exchange reserves fell to lower levels than that of Bitcoin. Even though both assets presented higher levels of coin scarcity, the same for ETH was greater than BTC.
Bitcoin exchange balances relative to total circulating supply reached a three-and-a-half-year low of 13.32 percent on September 8th.
Furthermore, it appears that Ethereum is becoming increasingly scarce on controlled exchanges, surpassing Bitcoin’s scarcity. The macro pattern of increasing scarcity of Ethereum and Bitcoin over time implied that ETH’s exchange balance relative to circulating supply was lower than BTC’s.
Furthermore, Ether burning reached a new milestone when the daily Ether burning number approached the 15k mark. All of these variables may be making Ethereum more deflationary, acting as a safety nett when the price falls.