Nick Chong · 3 days ago · 2 min read · Insights via Grayscale Investments
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Unlike traditional assets, where each transaction is not recorded in a central database shared with the world, Ethereum and other cryptocurrencies are almost entirely transparent. One may not know who made a certain transaction or who owns an address, yet firms and individuals can all gain access to the metadata of every transaction that transpires on these networks.
It is a nearly inescapable fact that many have used to their advantage, analyzing the data to get an edge over their fellow investors and users.
Adam Cochran, a marketer-turned-angel/venture investor in the cryptocurrency space and an adjunct professor at Conestoga College, confirmed the importance of on-chain data on Apr. 28, when he released an over 100-part Twitter thread of remarks on the behaviors of Ethereum’s top 10,000 holders (by holding size).
His conclusion, “all things point up for ETH.”
Ethereum’s whales are flashing a swath of bullish signs
In his analysis of Ethereum’s biggest “whales,” Cochran made 31 key findings. Save for some, practically all of them can be interpreted as bullish for the cryptocurrency. Some of the key findings are as follows:
- Whales are accumulating ETH: “Existing whales have increased their position by more than 4 percent in the past six months,” he wrote, which reportedly amounts to $550 million worth of ETH purchased. This sum is important because this rivals “the roughly $600 million in new capital influx Bitcoin was estimated to see last year.”
- Some of the world’s biggest institutions, Microsoft included, are stacking the crypto: In a similar vein, Cochran found that “wallets associated with major players such as JPMorgan Chase, Reddit, IBM, Microsoft, Amazon, and Walmart” are accumulating the cryptocurrency. CryptoSlate’s report on this facet of Cochran’s analysis is linked.
- Ethereum sell walls are being “chewed up”: The analyst observed that in the “past 6 months, exchange deposits grew ~5x from 11,000 a day to >55,000 a day.” This is normally indicative of a bear market, yet prices have actually increased, suggesting mass accumulation of ETH during this time.
- Miners are hoarding coins: As Ethereum 2.0 is nearing, miners have begun to hoard their coins, accumulating $230 million worth of the cryptocurrency in the past six months. Cochran remarked that this is a sign that miners are bullish on the future of the asset, especially in regards to staking.
- ETH is being used as money: 16.2 million ETH coins are in “active” circulation, meaning that in the last 90 days they have passed through a payment processor, payment gateway, or smart contract. This indicates, Cochran wrote, that the cryptocurrency is being “HEAVILY used as money and as gas.”
- Ethereum ICO participants are dedicated: of the ICO participants in the top 10,000, “97.4 percent of them still hold more than 75 percent of their initial ETH purchased.” Founders of the cryptocurrency, including Vitalik Buterin, have been holding many of their coins as well.
Reiterating the meaning of the findings for holders of the top altcoin, this is the conclusion the investor and marketer came to: “all things point up for ETH.”
This is Cochran’s third extensive analysis of the Ethereum ecosystem in the past two weeks.
Previously, he suggested that the upgrade to staking through ETH 2.0 could be one of society’s biggest economic shifts ever, and opined in another thread that the DAI stablecoin by MakerDAO could be the biggest existential threat to decentralized finance. CryptoSlate’s pieces on this research are linked.
Now add bullish fundamentals to the mix
To add to these bullish on-chain trends, Ethereum recently got a big fundamental boost with the news that Andreessen Horowitz (a16z) — a VC firm known for its early investments in Twitter, Slack, and Instagram — just finished fundraising for “Crypto Fund II.”
This is a new $515 million fund that will be investing in the following five categories in crypto and blockchain:
- Next Generation Payments
- Modern Store of Value
- Decentralized finance
- New Ways for Creators to Monetize
- Web 3.0
Andrew Kang, a venture investor himself, argued that Ethereum is likely going to be one of the biggest beneficiaries of the new fund. The investor interpreted a16z’s assertion that it will be investing heavily in “next-generation payment” projects as a sign that they will be “investing in ETH, the stablecoin settlement layer.”
This assertion is likely correct: a16z’s Crypto Fund I made a swath of investments into the Ethereum ecosystem, investing dozens of millions in stablecoin projects, MKR, Synthetix Network Token, and DeFi protocols like Compound and dYdX.
This confirms that the spec the testnet is running is operational and without glaring bugs this far, indicating the upgrade is on track to arrive by the summer, as Ethereum 2.0 researcher Justin Drake has suggested.
🎊 Milestone! 100k slots at Topaz testnet! 🎊
💎3200 finalized epochs
💎@prylabs controls less than 53% of the network
💎Some nodes with 300 peers pic.twitter.com/LDZxiC8a0r
— Terence Tsao (@terencechain) May 1, 2020