Is Ethereum Taking Over as the Preferred On-Chain Hedge over Tokenized Gold and Silver?

Ethereum has remained above the $3,000 level since the beginning of the year, while gold and silver have reached new highs. These precious metals have become significant assets for traders on the blockchain, thanks to the process of tokenization.

Key Takeaways

Ethereum has maintained a position above $3,000, attracting attention as gold and silver reach new heights.
Recent whale activity indicates a potential capital rotation toward Ethereum.
Ethereum ETFs have seen significant capital inflows, further supporting the trend.
Key support levels for Ethereum are crucial for its ongoing strength in the market.
The future price of ETH could see upward movement as more investors shift their capital from traditional assets.

Is Ethereum replacing tokenized gold and silver as the new on-chain hedge?

Currently, Ethereum has seen a minor decrease of 1% in value, whereas gold and silver have increased by 1% and 1.85%, respectively. The promising daily trading volumes raise the question: Is there a shift in capital toward Ethereum?

Is a Shift in Capital Happening?

Recent data from Lookonchain reveals that a large investor, known as a whale, exchanged tokenized gold (XAUT) and iShares Silver Trust Tokenized ETF (SLVon) for Ethereum (ETH). This swap occurred as gold and silver reached new peaks, prompting profit-taking among traders.

The whale sold 326 XAUT worth $1.53 million and 10,978 SLVon valued at $936K to acquire 724 ETH worth approximately $2.40 million. This transaction suggests that there might be a rotation of capital, potentially leading to a rebound in the crypto market.

Gold Ethereum Source: Lookonchain

Simultaneously, other whales are still purchasing silver. Data gathered from BSCscan indicates that one user bought over 593 SLVon for about $50K. This suggests that the capital shift isn’t yet complete, but institutional investors and large holders are starting to move in a new direction.

Increased ETH Accumulation

Ethereum ETFs have attracted over $520 million in investments, supporting the idea of capital rotation in the market. Since December 29, 2022, over 158,545 ETH have been acquired. Looking at the weekly data, we see a trend of positive inflows throughout the beginning of the year, with 13.9K, 8.46K, and 136.2K tokens purchased in the previous three weeks.

ETH ETF Source: Ali Charts/X

Whales have also been increasing their ETH holdings following these recent developments. A new wallet has purchased 6,000 ETH, valued at over $19 million from Binance, and transferred them to Aave Protocol.

Despite this, the market remains mixed, with some whales forced to sell their Ethereum holdings. For example, FG Nexus sold portions of its ETH assets, while another whale liquidated their positions due to market pressures.

Support Levels for Ethereum

Ethereum’s weekly price chart indicates it is trading above its annual opening price of $2,972, which supports the ongoing accumulation phase for ETH. Remaining above this crucial demand level, which attracts whales and institutional buyers, could signify market strength. However, a drop below this level could lead to impatient holders selling off, impacting the overall outlook.

Ethereum Chart Source: ETH/USDT on TradingView

As more capital shifts from gold and silver into Ethereum, there's potential for ETH to rise above $4,000. While the timeline for such a move is uncertain, the indicators suggest a positive trend.

Final Thoughts

The cryptocurrency market is showing signs of a shift, with Ethereum potentially becoming the go-to choice for investors looking to hedge against market volatility through on-chain assets. As more capital flows into Ethereum, it is important for traders and investors to keep an eye on these market dynamics for future opportunities.