Ethereum Supply is Constricting with Whale Purchases: Revitalization in Institutional Interest

Ethereum's supply has seriously begun to constrict with the massive purchase of 1 million ETH made by large investors in a single day. This marks the largest daily purchase recorded since 2018 and indicates that confidence in Ethereum at the institutional level is regaining strength.

Additionally, the Ethereum Foundation's transfer of 9,000 ETH to a single address further reduces the circulating supply, increasing bullish expectations in the market.

On the other hand, according to data shared by COINOTAG, there is a record level of net short positions on Ethereum at CME. This situation, combined with the accumulation trend of whales, creates a potential ground for a "short squeeze."

Intense Whale Accumulation Drives Ethereum Supply to Historical Levels

Whale wallets holding between 1,000 and 10,000 ETH have accumulated over 1 million ETH in just 24 hours, marking the largest daily purchase in the last seven years. This move brought the total assets of these addresses to over 14.3 million ETH and significantly reduced the ETH liquidity on exchanges.

This supply contraction significantly impacted ETH's rise from around $2,100 support level to $2,500. Experts note that such accumulations can historically precede price increases.

Strategic Transfers from the Ethereum Foundation: A Message of Confidence to the Market

The Ethereum Foundation's recent transfer of 9,000 ETH was another significant development supporting the supply crunch in the market. These transactions were sent in batches of 1,000 ETH via ten different transactions to the Gnosis Safe wallet.

Such transfers are likely planned as OTC transactions or staking strategies, reducing the circulating supply and decreasing selling pressure in the market. This move is considered part of institutional strategies that strengthen the positive outlook on Ethereum.

Record Short Positions on CME: Is a Potential Short Squeeze Coming?

In an environment where whales are buying, institutional investors at the Chicago Mercantile Exchange (CME) have opened more than 11,000 net short positions on ETH. These two opposing trends present significant potential for a market breakout.

If the price of Ethereum continues to rise, these short positions may have to be liquidated quickly, resulting in a significant "short squeeze". This scenario could pave the way for rapid and sharp upward movements in prices.

DeFi and Stablecoin Trends Support Bullish Outlook

Decentralized finance (DeFi), considered the heart of the Ethereum ecosystem, is showing signs of revival. Total value locked (TVL) has exceeded $120 billion, reaching its highest level since late 2021. This increase indicates that users and investors are beginning to regain confidence in Ethereum-based protocols.

Additionally, an increase in the supply of stablecoins on the Ethereum network is also observed. This indicates a renewed entry of unsecured liquidity into the market and the formation of new capital for ETH purchases. The increased DeFi activity and stablecoin liquidity, combined with limited supply, create a suitable ground for pushing prices even higher.


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