Unlike Bitcoin, Ethereum’s ATH was powered by relatively low demand

Source: Adobe / onnarong

Unlike Bitcoin (BTC), Ethereum’s (ETH) recent all-time high (ATH) was driven by lower prior demand, according to an analyst.

“The all-time high Ethereum price this week from [USD] 2,151 were well above a high level of support, indicating that the peak was driven by relatively low demand. This is in contrast to Bitcoin, which previously had greater demand beyond a high price level, “said Philip Gradwell, chief economist at US-based blockchain analytics firm Chainalysis, in its Intel market report this week.

He analyzed the acquisition costs for the entire Ethereum offering – the ETH 115 million, which is held by 1,525 groups of companies. According to Gradwell, this data shows how much is held by those willing to buy and hold at least at their cost. This then shows how much demand there was previously at different price levels, which indicates support for each price level.

After examining the USD acquisition costs held by ETH on April 5, the chief economist found that “a very large part” of this crypto asset is held by companies that acquired it for around USD 1,800.

On the flip side, relatively little ETH was acquired, around $ 700,000, over $ 1,850 for a total of $ 1.4 billion.

Gradwell stressed, however, that this analysis contains reservations, e.g. For example, that the data describes only crypto moving in the chain and that the cost of acquisition is calculated as the weighted average of a company’s ETH, some of which can be acquired at low cost and some at high cost.

What he also observed are ETH cost curves. Similar to BTC, these cost curves show since November 2020 that the ETH market has changed “radically” in the last few months. He noted that the rapid January-April price hike – from $ 737 on ATH – was accompanied by “a major acquisition of Ethereum in many corporate groups.” This further led to a “considerable increase” in the acquisition costs for the ETH 50 million from the offer of the ETH 115 million.

Unlike Bitcoin, Ethereum's ATH was powered by relatively low demand - Analyst 102Source: chain analysis

“So while an Ethereum price of more than [USD] 2,000 have limited support, a cost of more than [USD] 1,500 now have strong support, with 33.3 million Ethereum acquired above that level at a total cost of [USD] 58 billion, “said Gradwell.

In addition, the November and December 2020 cost curves suggest that a small portion of ETH was acquired at significantly higher costs than the rest of the offering – which can also be seen in cost curves from previous periods.

This phenomenon, Gradwell wrote, is the result of small amounts of ETH purchased from previous ATHs, mostly in the bull run in late 2017, that continued to be held despite falling prices.

“It is noteworthy to me that most of the Ethereum holders who acquired in late 2017 surrendered, with the exception of a small number whose losses were finally reversed in early 2021,” concluded the economist, adding:

“The persistence of a small but very bullish cohort of Ethereum buyers supports my concern that the highest Ethereum prices tend to have a tight support base, at least when compared to Bitcoin.”

As previously reported, Gradwell last week analyzed the amount of Bitcoin held by various companies, as well as certain cost curves, and found that the market has changed radically over the past few months. In addition, the cost base for many BTC is now “radically higher” than it was just a few months ago, “which shows that a broad group of market participants are willing to buy and hold at much higher prices than before”.

At 10:21 UTC, ETH is trading at USD 2,099 and is up 5% in one day and almost 7% in one week. At the same time, BTC is trading at USD 58,147. The price rose 3% in one day, reducing its weekly losses to less than 1%.
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