Ethereum ICO Whale Emerges as Market Factor

An early investor from the Ethereum (ETH) Initial Coin Offering (ICO) has reentered the market, potentially influencing Ethereum’s price dynamics. 

The wallet, linked to the 2015 ICO, became active after several years of dormancy, sparking speculation about its broader impact on the cryptocurrency ecosystem.

Significant liquidation and wallet movements

A dormant Ethereum ICO wallet made headlines when it recently liquidated 48,500 ETH for $154 million, selling at a rate of $2,658.67 per token. This transaction left the wallet with a remaining balance of 15,600 ETH. The original purchase price during the ICO was just $0.31 per ETH. 

Hours after the initial sale, an additional 5,000 ETH was moved to OKX for further liquidation. On-chain analysis suggests that this wallet may be part of a larger cluster of early ICO investors. Notably, this whale holds no other significant assets, except for a small USDC deposit. The wallet has interacted with the MakerDAO voter contract but lacks other tokens or NFTs.

Concerns over reawakened wallets

The activation of such dormant wallets raises concerns about the potential for further sell-offs by long-term ETH holders. This move follows similar divestments by entities like Jump Crypto, which unstacked and sold their ETH holdings. These actions suggest that some whales may not be interested in holding ETH for its utility or in providing liquidity to DeFi platforms. 

For instance, the Plus Token Ponzi scheme, which still holds over 19,000 ETH valued at $51 million, has already begun liquidating some of its holdings and may continue to do so. This trend could place additional selling pressure on the market, especially as demand for Ethereum ETFs remains subdued.

Ethereum’s wealth distribution and DeFi slowdown

Ethereum’s wealth distribution remains heavily skewed towards the top 500 holders, who control over 42 million ETH, a figure comparable to the total staked tokens in the network. Early ICO investors still hold more than 682,000 ETH, a substantial amount but still a fraction of Grayscale’s 2.3 million ETH reserves. 

The recent reawakening of these early investors’ wallets could lead to significant shifts in the Ethereum ecosystem. In parallel, Ethereum’s DeFi sector has experienced a slowdown, primarily due to the decline in ETH’s market value. The total value locked (TVL) in DeFi protocols has dropped to $49 billion, largely because of the depreciation in ETH used as collateral. 

Additionally, there has been an outflow of $8.8 billion in value from Ethereum’s main chain to Layer 2 (L2) networks such as Arbitrum and Optimism. While these L2 networks have successfully scaled Ethereum’s capabilities, the shift has also reduced the ETH burn rate, leading to a slight increase in network inflation. The Ethereum network now produces over 15,000 new tokens weekly, which are distributed as fees to validators and block builders, some of whom have also begun selling their ETH to secure gains.

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