The cryptocurrency market is witnessing a noticeable shift in the spot trading activity of Ethereum (ETH), indicating that large investors are accumulating this asset at discounted prices. This change in behavior, similar to historical patterns, is being viewed by analysts as a potential signal for a trend reversal, also known as a local bottom.
On-chain data from CryptoQuant reveals that "whales" – a group of wallets holding 10,000 to 100,000 $ETH – have increased their balances by 7.6 million tokens since the end of April, equivalent to a 52% increase. In contrast, smaller retail wallets (holding 100 to 1,000 ETH) are selling off, reducing their holdings by 16%.
CryptoQuant's ShayanMarkets analyst noted that high-volume spot trading has been observed multiple times after Ethereum dropped to $3,000 in early November. This pattern often marks "the beginning of trend reversal phases or late compression stages before major price increases."
Local Bottom and Favorable Macro Context
Shawn Young, Head of Analysis at MEXC Research, believes that the accumulation ability of whales forming a local bottom remains high. He pointed out that this cycle looks similar to previous bottoms, marked by large wallets absorbing liquidity sold off by short-term holders.
Young also emphasized several indicators of Ethereum's relative strength:
The ETH/BTC ratio has stabilized at low levels for several months.
Daily trading increased by 25% compared to September.
The discount on staked Ethereum has normalized after the significant market drop on October 10.
This momentum is not just limited to Ethereum but also reflects a shift in broader market dynamics, driven by improving macroeconomic prospects, including the potential end of one of the longest government shutdowns in the U.S.
Lai Yuen, investment analyst at Fisher8 Capital, added: "The accumulation by whales makes sense, and we see the same for Bitcoin, with new participants coming in to absorb selling pressure from OGs who believe in the four-year cycle." Yuen forecasts: "If macro conditions continue to hold... the likelihood of this being a local bottom is high for Ethereum at $3,200 and Bitcoin at $98,000."
Catalyst Regulation and Fusaka Upgrade
The main driving factor for institutional capital re-entering the market comes from expectations of regulatory clarity. Yuen noted that there is still significant interest from traditional finance (TradFi) in asset tokenization, and a supportive regulatory framework could provide an additional bullish catalyst. A bill on crypto market structure could eliminate the regulatory ambiguity keeping many investors on the sidelines, thereby boosting Ethereum's price.
The second key factor is the Fusaka upgrade, expected to activate on the mainnet on December 3. This highly anticipated update promises to enhance the network's scalability and reduce transaction costs by adding dedicated data lanes for rollups (known as blob lanes).
Young from MEXC Research explained: "This is an important update because the future of Ethereum adoption will come from real-world applications and DeFi protocols, all of which rely on cheaper, faster transactions." This upgrade will also introduce Peer Data Availability Sampling, allowing nodes to share smaller pieces of data instead of entire blocks, reducing bandwidth and hardware requirements, thereby enhancing decentralization and security.
Hidden Downsides: Reducing Network Fees
Despite the clear benefits, Yuen points out a potential trade-off. Making Layer 2 cheaper through blob lanes could "lead to a decrease in network fees, thus reducing the amount of ETH burned (Ethereum burn)," an important deflationary mechanism of the network.
However, if the current accumulation behavior continues and the support area of $3,000 to $3,400 holds, analysts expect Ethereum to enter a consolidation phase, paving the way for the next potential price increase. #anh_ba_cong
