Ethereum (ETH), the world’s second-largest cryptocurrency, reached a new all-time high on May 6, breaking above the $3,500 mark. This surge follows its recent breakthrough past $3,000 just days earlier. While Bitcoin has experienced repeated fluctuations, Ethereum’s strong performance stands out despite its historical correlation with Bitcoin.
Ethereum’s total market capitalization now stands at approximately $400 billion, nearly 40% of Bitcoin’s valuation. A year ago, Bitcoin’s market cap was over seven times larger than Ethereum’s.
However, risks remain due to the concentration of ETH among large holders. On-chain data shows that although there are over 150 million Ethereum addresses, the top 50 addresses control about 31% of the circulation. In the past week, seven of the top ten active addresses sold a significant amount of ETH—totaling 1.29 million tokens—cashing out over $4 billion.
Ethereum’s Meteoric Rise: A 16x Increase in One Year
Ethereum has continued its record-breaking upward trend over recent days. According to market data, ETH surpassed $3,500 in the early hours of May 6. Since crossing the $3,000 threshold on May 3, the asset has maintained strong momentum. As of the morning of May 7, ETH was trading around $3,529 with a weekly gain of nearly 29%. Over the past year, it has surged by more than 16 times.
Ethereum serves as the foundational asset for decentralized applications (dApps) operating on its blockchain protocol. The value within blockchain ecosystems is largely concentrated at the protocol layer, where Ethereum dominates, especially in decentralized finance (DeFi). Approximately 90% of DeFi projects are built on the Ethereum network. The growing adoption of DeFi has driven substantial demand for ETH, contributing significantly to its price appreciation.
Recent developments have also fueled optimism. Canada approved three Ethereum-based exchange-traded funds (ETFs) in late April, and the European Investment Bank announced plans to issue digital bonds on the Ethereum network. These institutional moves have provided additional support for ETH’s price.
The Bitcoin-to-Ethereum ratio has also reached a new high this year, suggesting the crypto bull market may be entering a later phase. Market analysts point to both capital rotation and retail investor behavior as factors in Ethereum’s rise. Investors who profited from Bitcoin’s earlier rally are now diversifying into other assets, with Ethereum being a major beneficiary. Additionally, new retail investors often perceive Ethereum as more affordable than Bitcoin, further boosting demand.
Ethereum Closes the Gap with Bitcoin
Ethereum's rapid growth is narrowing the market cap disparity with Bitcoin. Currently, Bitcoin is trading around $57,000 with a total market value of approximately $1 trillion—about 2.5 times that of Ethereum. A year ago, Bitcoin’s market cap was $169 billion compared to Ethereum’s $23 billion, a difference of more than seven times.
In terms of overall crypto market dominance, Bitcoin now accounts for about 47%, while Ethereum makes up 18% and continues to grow. Nonetheless, experts note that Bitcoin’s status as the leading cryptocurrency remains unshaken. During bull markets, altcoins like Ethereum often gain market share, but Bitcoin’s dominance typically rebounds when market sentiment turns bearish.
Large Holders Sell 1.29 Million ETH
Despite Ethereum’s price surge, many major holders have begun selling significant portions of their holdings. Ethereum’s distribution is relatively concentrated: the top 10 addresses hold 19% of the supply, while the top 50 control 31%. A crypto address functions similarly to a bank account or digital wallet, holding balances of specific tokens.
In general, a more decentralized token distribution is considered healthier and less prone to manipulation. However, analysts caution that some top addresses belong to exchanges or custodial wallets that hold assets on behalf of many individual users, which can create a false impression of concentration.
Comparing current data with that from three years ago reveals a notable shift. In June 2018, the top 10 Ethereum addresses held only about 10% of the supply. Since then, many of these addresses have accumulated more ETH, increasing the risk of price manipulation.
In the seven days leading up to May 6, large active addresses sold approximately 1.29 million ETH. Based on an opening price of $3,300 on May 6, these sales could represent a cash-out of over $4 billion. This selling activity suggests that some major players believe Ethereum is currently overvalued. Still, after years of accumulation, these holders retain significant reserves and may not be fully exiting their positions.
It’s also possible that recent large transactions are related to third-party activities, such as project funding or institutional rebalancing, rather than pure profit-taking. As with any emerging asset class, investing in cryptocurrency involves both opportunity and risk. Prospective investors should carefully assess their risk tolerance and conduct thorough research before participating in the market.
For those looking to track real-time market movements, reliable data and analytical tools are essential.
Frequently Asked Questions
What caused Ethereum to break above $3,500?
Ethereum’s price surge is largely driven by growing demand from decentralized finance (DeFi) applications, recent approvals of Ethereum ETFs in Canada, and announcements of institutional projects like digital bond issuance on the Ethereum network. Increased retail interest and capital rotation from Bitcoin also contributed.
How does Ethereum’s market cap compare to Bitcoin’s?
Ethereum’s market capitalization is around $400 billion, roughly 40% the size of Bitcoin’s, which is approximately $1 trillion. This gap has narrowed significantly from a year ago when Bitcoin’s market cap was seven times larger.
Why are large Ethereum holders selling?
Some major holders may believe the current price is overvalued and are taking profits. However, not all large sales indicate a loss of confidence—some transactions may be related to liquidity needs, portfolio rebalancing, or operational requirements of institutional platforms.
Is Ethereum’s distribution too centralized?
Although the top 50 addresses hold about 31% of ETH, this includes exchange wallets that hold funds for many users. While concentration risks exist, the situation is more complex than it appears at first glance.
What should new investors consider before buying Ethereum?
New investors should evaluate their risk tolerance, understand market volatility, and use reputable platforms for trading. It’s also important to stay informed about market trends and regulatory developments.
Where can I learn more about Ethereum investing strategies?
You can explore educational resources and market analysis to better understand market dynamics and investment approaches. Always rely on multiple sources before making financial decisions.