Before the US launch of the spot ETFs for ETH, the market was preparing itself for volatility. Although ETH’s Price action in recent weeks has been rather uninteresting. Large holders seem to be expecting price fluctuations and are hurrying to cash out.
Glassnode’s data on realized profit for Ethereum holders shows a dramatic increase from $144.598 million on July 21 to $747.311 million on July 22. The increase is significant and represents the largest realized profit for more than 40 days.
A spike of this magnitude warrants detailed analysis on wallet size and the holding periods that were involved. According to data, wallets that held between 10,000 and $100,000 ETH on July 22 made $626.982 millions in profits. This is up from the $35.744million profit they had realized just one day earlier. It is clear that institutional investors or wealthy individuals are likely to be the largest holders of ETH.
The significant rise in profits was mainly due to long-term owners. Profits generated by wallets which held ETH longer than a calendar year soared from $92.751 millions to $666.227million. This is a strategy to secure gains ahead of potential volatility in the market associated with ETF launches.
The most notable increase in realized profit is for the age group 6 to 12 months, where realized profits jumped from $3.964 millions to $577.677. It is clear that those who hold their shares from the middle of 2023 will be able to secure their profit.
The spike in realized profits highlights the market’s cautious approach to the anticipated changes with the advent of spot ETH ETFs. We can expect to see more realized profits as trading intensifies. CryptoSlate has previously reported The premarket trading activity of ETH ETFs generated a substantial amount significant interestThis shows that the markets are preparing for the risks and opportunities associated with new ETFs.
It’s also possible that large and institutional Ethereum holders are realizing profits and reinvesting them into ETH ETFs instead of holding spot ETH directly. For institutional investors and high-net-worth individuals, ETFs’ regulatory oversight and transparency can reduce the risks associated with holding ETH directly. ETFs also offer the benefit of simplified tax reporting. ETFs receive a more favorable tax treatment than direct holdings of the underlying assets in most jurisdictions. It can result in more efficient tax planning for investors with high asset volumes.
Another important factor is liquidity. The ETFs trade on the traditional stock exchanges which offer better transaction settlement and liquidity. The ability of large holders to liquidate ETH without significantly impacting market prices could be a significant advantage.
Post Large holders cashed out ahead of Ethereum ETF launch The first time that appeared on CryptoSlate.
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: cryptoslate.com