Ethereum (ETH) price shows impressive recovery in May, gaining over 50% in value

May saw an impressive recovery for Ethereum, with the asset gaining over 50% in value. A closer look at the blockchain data after the Pectra update provides an interesting snapshot of changing investor sentiment, which may explain the asset’s strong performance.

As a result, many analysts are now predicting further price increases.

More than 1 million ETH left exchanges in a month

Data from Cryptorank shows that the supply of Ethereum on centralized exchanges has dropped from over 18 million to around 17 million coins in just one month.

Ethereum supply on centralized exchanges over time. Source: Cryptorank

“Over the past month, more than 1 million ETH have been withdrawn from centralized exchanges, reflecting around 5.5% of the total Ethereum held on these platforms. This trend indicates that users are increasingly choosing to accumulate ETH rather than engage in trading activities. The recent Pectra update, launched on May 7, might further support this behavior, which in turn could exert upward pressure on the ETH price.”

CryptoQuant data shows that over 300,000 ETH has been withdrawn from Binance alone in the last month. Since the beginning of the year, more than 800,000 ETH has been withdrawn from the platform.

Most notably, withdrawal activity was not only observed when ETH prices plummeted below $1,400 in early April but also accelerated during the recovery above $2,400 in May.

A graph from CryptoRank clearly shows how ETH prices rose when reserves on exchanges fell, confirming the correlation between supply and price.

Whales are breaking accumulation records

Additionally, addresses of large holders have recorded the highest inflows in history. CryptoQuant reports that whale wallets accumulated more than 325,000 ETH on May 12, the highest ever recorded for a single day.

When whales accumulate assets, they typically withdraw ETH from exchanges to store in cold wallets. This reduces the circulating supply and creates upward pressure on the price.

Arthur Hayes believes in Ethereum’s advantage over Solana

Despite these positive blockchain indicators, the price of ETH is still far from its peak. It needs to grow another 70% to surpass the 2024 high, and more than double to reach a new all-time high.

On May 18, Arthur Hayes stated in an interview with Fortune that while ETH is now generating some investor dislike, the asset remains the safest blockchain with the highest total value locked (TVL). He believes ETH will soon surpass Solana in terms of price growth.

“I think Ethereum has the best growth prospects mainly because it is so widely disliked. Everyone keeps saying that Ethereum is useless and that developers haven’t done anything worthwhile. But the facts say otherwise: it still has the highest TVL, the largest number of developers, and it’s still the most reliable blockchain based on proof-of-stake. Of course, the price performance since 2020 has not been particularly impressive.

Solana, for its part, has seen impressive growth, rallying from $7 to $172. But if I were to invest fresh fiat money, I think Ethereum could outperform Solana in the next 18-24 months of a bull market,” Hayes explained.