Ethereum’s 31% Rally: Did Institutional Buying Drive ETH…

Ethereum (ETH) rallied 31.6%, rising from $1,904.14 on 18 August to $2,506.53 on 27 August. Headlines increasingly point to institutional buying, Ethereum ETF inflows, and whale accumulation as key drivers, but does the on-chain data actually support that claim? To establish if this narrative is true, we analyzed Dune Ethereum on-chain data using DEX volume for the period of the rally and came up with several interesting findings. In this piece, we only highlighted two major questions to shed light on what really happened behind the scenes of popular media coverage.

Was ETH's rally actually being bought on-chain?

We analyzed data for ETH volumes within the window of the rally. During this time, ETH traders bought $2.217B vs $2.090B sold, resulting in just $126.9M net buying, which represents about 2.95% net-flow ratio. While our on-chain data reveals that DEX traders were net buyers within this period, the margin was too small to justify the huge gains recorded.ETH price rose 14.22% on August 20 alone, while buying and selling remained almost balanced. The interesting question is whether the rally was actually driven by significant Ethereum institutional buying volume as is commonly reported. Chart of ETH buy vs sell volume. Source Dune.com | Analysis by author

Actual ETH quantities tell the same story

To further solidify the findings, we checked the result using ETH/WETH token amounts, rather than just dollar volume. During the time of the rally, total ETH bought was ~951,282, total sold was ~893,355 ETH, bringing the net accumulation to ~57,927 ETH.That's approximately a small 3.14% net-flow ratio, which confirms that our conclusion isn't simply based on ETH's changing price during the rally, but actual ETH flows as well. ETH experienced its biggest daily price jump during this time while DEX buying and selling were almost balanced. Notably, the price continued to rise on some days with net sell volume, such as August 22 with a net-flow ratio of -6.06%. This pattern shows that DEX spot flows don’t perfectly explain ETH's price movement during the rally despite the fact that some strong price days did coincide with buying, such as August 19 with a net-flow ratio of +12.84%.Chart showing ETH net buy against price. Source: Dune.com | Analysis by author

Who really accumulated ETH during the period?

If aggregate DEX traders weren't responsible for a huge net accumulation, the next natural question is, who actually accumulated ETH during the rally?To answer that, we used our four whale cohorts to investigate the DEX volumes around the period. In agreement with our previous research, whales with $100K–$500K had the overwhelming volume size with a total of 5,595 trades, $554.1M buy, $503.8M sell, and +5.3M net flow. Chart showing ETH buy volume by whale size. Source: Dune.com | Analysis by authorHowever, to avoid leaving any possibilities of bias untouched, we investigated the trades by wallets and found that though the $100K-$500K cohort had much more number of trades, the fewer $5M+ wallets were the ones responsible for a significant portion of the actual buying. The result showed that wallets of $5M+ wallets were majorly responsible for the volumes, while $100K-$500K whales were responsible for the trades. Chart of ETH buy and sell volumes by whales. Source: Dune.com | Analysis by authorThis is an interesting pattern, so we went further to investigate wallets within the $5M+ cohort that could be responsible for the volumes. We found that the volumes were highly concentrated, with just two wallets driving ~$182M of net buying, accounting for roughly 89% of the $5M+ accumulation. Interestingly, those large accumulations were done using small 100k-500k trades, which explains the high number of trades seen in this first cohort. Chart of ETH accumulation by wallets. Source: Dune.com | Analysis by authorIt is worth noting, however, that the huge wallets are mostly DEX and DEX aggregator wallets and not all real individual whales, so they cannot be regarded as pure whale accumulations, and we cannot conclude that the rally was caused by massive whale accumulations, even if there was a larger net buy.

So what really happened?

Our data shows no evidence that actual whale accumulation caused the ETH rally in August, thus questioning the narrative being reported in recent Ethereum news. The numbers just don't add up, because the net flow difference is quite insignificant compared to the size of the rally.One possible explanation is that the rally was amplified by crowded short positioning. If ETH began moving higher with such positioning, forced buying from liquidations could have accelerated the move as a result of a short squeeze that makes it look like there was actual Ethereum institutional buying.