Ethereum has been hovering near the $4,000 mark, driven by a major turnaround in the US Securities and Exchange Commission’s (SEC) decision to approve spot ETH ETFs. This development has fueled trader optimism about the leading altcoin’s price trajectory.
However, increased inflows of ETH into cryptocurrency exchanges could spell trouble.
ETH Inflows Signal Selling Trend
ETH has gained almost 20% over the past month. The resurgence in its performance has been mainly influenced by the market’s expectation to spot Ethereum ETFs in the United States.
Although the asset’s price action was underwhelming immediately post-approval, the movement toward the $4,000 mark was deemed crucial and noteworthy.
The volume of Ether entering exchanges reached its peak since January, with a net inflow of 140.66k ETH on May 26th, marking the highest net deposits in more than four months.
According to the data compiled by IntoTheBlock, such significant inflows to exchanges usually indicate selling activity, as individuals aim to secure profits or react to fear, uncertainty, and doubt (FUD).
The amount of Ether flowing into exchanges hit the highest point since January!
With a netflow of 140.66k $ETH on saturday, this marks the highest net deposits to exchanges in over 4 months.
High inflows to exchanges are typically a sign of selling behavior, as people either… pic.twitter.com/XAesouv0XR
— IntoTheBlock (@intotheblock) May 28, 2024
Who’s Profit-Taking?
With the recent price gains, Lookonchain observed that a “smart money” investor recently sold 3,025 ETH for 11.8 million DAI at an ETH price of $3,904, resulting in a profit of approximately $1.11 million.
Furthermore, this investor had accumulated 17,770 ETH between 2017 and 2020 at an average cost of $182 per ETH. On March 28, 2024, they sold this ETH at a price of $3,503 per token, generating a profit of around $59 million.
Another interesting activity by an Ethereum whale was noted by the platform, who recently withdrew 2,856 ETH, valued at $11 million, from Kraken. This whale had previously accumulated 35,176 ETH from the same exchange at an average price of $428 per ETH between October 2018 and November 2022.
On October 20, 2023, the whale deposited all this ETH back into Kraken when the price was $1,610 per ETH, realizing a profit of approximately $41.6 million. However, this sell-off was mistimed as the crypto market rallied shortly after. If the whale had held onto their ETH, their profit would now be around $122 million.
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