Has the "change of hands" for ETH ended? A few days ago, some friends asked about the concentration of ETH chips. I previously shared that the Herfindahl index can effectively reflect the concentration issue. It measures the share of network addresses in the current supply; a higher index indicates that chips are concentrating among a few holders, while a lower index suggests a more even distribution of chips. In a tweet on March 18, the index was at 0.75‰, and it has now risen to 1.1‰. From the overall time data of Ethereum, we can see three distinct phases (as shown in Figure 1): (Figure 1) 🚩 Phase 1: August 2015 - March 2023, the Herfindahl index started to decline from a high of 3‰; this process was very slow, taking a full 7 years. This indicates that over these 7 years, regardless of price fluctuations, ETH has been developing towards a more decentralized trend. 🚩 Phase 2: March 2023 - December 2024, the Herfindahl index bottomed out around 0.4‰; thereafter, whether due to large purchases after the ETF approval or the ups and downs in the bull market, the index has been hovering at the bottom. We analyze the logic behind this: theoretically, large institutional purchases after ETF approval should lead to an increase in concentration, but that hasn't happened. This suggests that during this period, there were also large holder addresses distributing chips to more decentralized addresses, offsetting the ETF purchases. Some friends have referred to this process as "ETH is changing hands," which is not without reason. 🚩 Phase 3: From December 2024 to now, the Herfindahl index has started to rise rapidly from the bottom, currently reaching the same height as in March 2018. It can be said that it took only 5 months to gather what previously took 5 years to decentralize. (Figure 2) From December 2024 to April 2025, the price of ETH dropped from $4,000 to $1,500, while the Herfindahl index was rising rapidly during the same period. This indicates that while the price of the coin was falling, a few holders were collecting chips in large quantities, and at the same time, there were no large holders distributing chips. This is the direct reason for the rapid rise of the Herfindahl index in a short period, indicating that concentration is increasing. While more concentrated chips do not necessarily mean a price surge, they certainly favor control over the market, and volatility will be amplified. Just like in recent days, the volatility of ETH has been much greater than that of other mainstream coins. Of course, the current concentration is at 1.1‰, which is still a long way from the historical high of 3‰. Will large holders continue to collect chips? — I definitely will, after all, once the arrow is shot, there’s no turning back; Will they continuously push the price up while collecting chips? — I don’t think so; as professional investors, they should know how to control their costs very well; Therefore, the process of large holders collecting chips will make the market quite torturous or difficult to keep up with the rhythm; the best approach is to "hold and ignore the ups and downs" or "if you don’t understand, don’t participate." But regardless, it can be anticipated that when ETH enters the "third phase," its performance should be different from any previous cycle. ‼️ My sharing is for learning and communication purposes only and should not be considered investment advice ‼️ ------------------------------------------------- This article is sponsored by #Bitget ｜@Bitget_zh