An Overview of Declining Ethereum Spot Volume and Others Keep Accumulating
Ethereum (ETH), which is currently trading at about $1,770, looks to be extending its period of price consolidation. ETH has dropped by about 3% in the last week, with a 1.6% decrease in the last day alone. After hitting a cycle high of $4,107 in December 2024, the market started a wider correction, which is being continued by this downward trend.
On-chain data suggests that even with the very small price movements, there may be short-term market behavior influenced by modest underlying changes.
Reduced Spot Volume Draws Attention to Market Caution
On-chain data suggests that even with the very small price movements, there may be short-term market behavior influenced by modest underlying changes.
Reduced Spot Volume Draws Attention to Market Caution
There are indications of weakening in Ethereum's spot market activity. Darkfost, an analyst with CryptoQuant, claims that the spot volume for ETH has been continuously declining. A bubble chart that shows two important metrics—the size of each bubble represents the total trading volume, and the color denotes the rate of change in that volume—is used to demonstrate his findings.
The analytical charts show increasingly smaller and lighter-colored bubbles, which indicate that Ethereum's trading activity is slowing down. This pattern points to a slowdown in the rate of volume decline as well as a decrease in the quantity of trades.
Traditionally, falling spot volume is seen as a bearish indicator, often pointing to waning investor interest or weakening market momentum. But in light of Ethereum's continuous drop, CryptoQuant analyst Darkfost presents an alternative interpretation.
A decline in trade volume during a downtrend can potentially have a stabilizing impact, claims Darkfost. The market is less likely to experience abrupt price movements when fewer big sell orders are flooding it, which helps to lessen volatility.
Reduced activity during a corrective phase, he adds, may mean that the majority of sellers have already left or are waiting on the sidelines. By reducing downward pressure and laying the groundwork for a possible market balance in the near future, this scenario may help stabilize prices.
But Darkfost also warns that a market bottom is not always guaranteed by dropping volume. It might only be an indication of a brief lull in volatility; further price activity is probably in store.
Long-Term Ethereum Owners Continue to Purchase Despite Unrealized Losses
Carmelo Alemán, a CryptoQuant specialist, recently conducted an investigation of the behavior of Ethereum's long-term holders and discovered that many of them keep accumulating ETH while suffering unrealized losses.
These wallets are known as "accumulation addresses" because they consistently receive Ethereum without making large sales. These addresses are linked to long-term investment strategies and greater market conviction, and they are frequently seen as strong hands.
According to Alemán, a key shift occurred on March 10, when the average purchase price of these accumulation addresses dropped below Ethereum’s current market value—pushing many holders into unrealized loss territory.
Interestingly, this hasn't stopped accumulation. The total Ethereum balance of these wallets increased from 15.5 million ETH to 19 million ETH between March and early May, a 22% increase.
This pattern shows that long-term investors are becoming more confident and think Ethereum is now cheap. Historically, bullish reversals have been preceded by comparable accumulation patterns during market downturns. The circulating quantity of ETH decreases as more of it gets locked up in long-term wallets, laying the foundation for a possible price spike when demand picks back up.
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