Santiment produces a very interesting metric involving Ethereum (ETH) whales.
It is the ratio of the number of ETH held in the 10 largest wallets that do not belong to exchanges, to those in the 10 largest exchanges addresses.
Santiment and price changes
Today on Twitter, Santiment shows the graph of the variation over time of this metric compared to the ETH price, revealing a possible correlation.
🐳 #Ethereum's top 10 non-exchange whale addresses keep climbing, while the top 10 exchange addresses are falling. The ratio between the two has shown evidence of being tied closely to price, and this rise in ratio continues to be a good sign for bulls. 👍 https://t.co/kVxWPh5aU3 pic.twitter.com/k24JQ8WPfk
— Santiment (@santimentfeed) October 12, 2021
Between the end of 2018 and the end of 2020, these two metrics remained relatively stable without huge variations, but as soon as the price of ETH soared in December 2020, so did the whale to exchange ratio.
The first curious thing is that the surge in the two metrics between late 2020 and early 2021 was simultaneous and of absolutely comparable magnitude. The two metrics continued to grow in a very similar way until April.
However, when the May speculative mini-bubble formed on the price of ETH, it grew much more and much faster than the whale/exchange ratio.
In fact, the second metric fell sharply in the first half of the month as the price reached new all-time highs.
This metric also measures large volume movements of ETH from whales to exchanges and vice versa. Thus, from November 2020 to April 2021, there were large withdrawals of ETH from exchanges to whale wallets. In May, however, the trend reversed with many deposits from whale wallets to exchanges, likely to take advantage of very high selling prices.
Santiment analyzes the relationship between ETH whales and exchanges
During the price collapse of the second half of May, the whale/exchange ratio metric came back up sharply, likely because whales may have taken advantage of the lowered prices to buy and accumulate ETH.
Although with ups and downs, from the second half of May until today, the whale/exchange ratio has continued to grow, touching in these days the maximum values of the last three years.
At this moment, many ETHs appear to have been withdrawn from the exchanges in recent months and deposited on the whales’ wallets, indeed also thanks to the staking on Beacon Chain.
Santiment comments on this situation by saying:
“The ratio between the two has shown evidence of being tied closely to price, and this rise in ratio continues to be a good sign for bulls.”
Until the whales start moving their ETH on exchanges, they expect prices to be able to go up again. While on the other hand, when they start doing so en masse, they feel that selling prices cannot go any higher.
The fact that the two curves continue together from November of last year to now suggests that the whales, who own those 10 large ETH addresses, have been able to make great deals during 2021.