TLDR
- Ethereum price has crashed over 87% from its all-time high
- Large ETH whales have recently sold millions worth of holdings
- ETH is approaching a make-or-break support level at 0.01623 vs Bitcoin
- Technical analysts identify a falling wedge pattern that could signal a bullish reversal
- Spot Ethereum ETFs have attracted only $2.34 billion in inflows, showing limited Wall Street interest
Ethereum, the second-largest cryptocurrency by market capitalization, continues to face significant downward pressure as large holders, commonly known as “whales,” offload massive amounts of coins. The digital asset has been in a steep decline for months, raising questions about its long-term viability in the increasingly competitive blockchain space.
The price of Ethereum has now dropped more than 87% from its all-time high. It’s currently trading around $1,589, after a recent 5.24% decline over the past 24 hours.
This ongoing selloff has seriously impacted Ethereum’s market dominance. The gap between Ethereum’s $191 billion market cap and XRP’s $145 billion has narrowed, creating the possibility that XRP could overtake Ethereum as the second-largest cryptocurrency.
The current downturn appears to have begun in September 2022 when Ethereum implemented “The Merge.” This major upgrade transitioned the network from proof-of-work to proof-of-stake, designed to make the network faster and more environmentally friendly.
However, the anticipated benefits haven’t translated into price appreciation. Instead, Ethereum has steadily lost market share to competing networks.
Competition from Layer-1 and Layer-2 Networks
Ethereum has faced growing competition from alternative layer-1 blockchains including Solana, BNB Chain, Sui, and Aptos. These networks have attracted users and developers with faster transaction speeds and lower fees.
More concerning for Ethereum’s prospects has been the rise of layer-2 solutions built on top of its own network. Projects like Base, Arbitrum, and Optimism have gained popularity by offering dramatically lower fees while maintaining compatibility with Ethereum.
“Ethereum is being killed by layer-2 networks on its ecosystem. These chains are faster, and most importantly, users love them for their lower fees. While Ethereum fees have dropped lately, it is not cheap enough. Time is running out for the network,” said Will Hamory of Financial Lead.
The introduction of spot Ethereum ETFs was expected to drive institutional investment. However, these funds have accumulated just $5.56 billion in assets with net inflows of only $2.34 billion.
One possible explanation for the lackluster ETF performance is that these funds don’t allow staking, which currently provides Ethereum holders with yields over 8%. Many investors prefer buying and staking ETH directly through exchanges like Coinbase and Binance rather than through ETFs.
Whale Activity Signals Market Caution
Recent market data shows that longtime Ethereum holders have been selling in large numbers. One early investor sold 10,702 ETH worth $16.86 million, which they had purchased at just $8 per token in 2016.
The sell-off has been accompanied by a 36% boost in daily trading volume, which now exceeds $35 billion. This increased activity reflects growing uncertainty in the market.
Large holders appear to have shifted their strategy to “sell-on-rise,” taking profits whenever the price shows signs of recovery. This behavior suggests whales lack confidence in Ethereum’s ability to sustain price increases.
President Donald Trump’s recent three-month trade barrier moratorium provided brief relief to crypto markets. However, Ethereum has seen limited benefit as large holders continue to sell their positions.
The U.S. SEC’s authorization of spot Ethereum ETF options trading could potentially attract institutional investors and improve market liquidity conditions. Market analysts suggest that institutional buying combined with reduced whale selling might create more favorable market conditions.
Technical Analysis Offers Mixed Signals
From a technical perspective, Ethereum‘s price chart shows concerning patterns. On the monthly chart, ETH/BTC formed a double-top pattern between 2021 and 2023 and has since moved below the neckline at 0.04897.
The pair has formed an inverse cup and handle pattern, which typically signals continued downward movement. It has also fallen below the 50-month moving average.
Ethereum is approaching a critical support level at 0.01623 versus Bitcoin, the lowest level since September 2019. A break below this level could lead to further decline, potentially reaching the all-time low of 0.0016 – about 92% below current levels.
However, some analysts see potential for recovery. Popular analyst Luciano-BTC has identified a falling wedge pattern in Ethereum’s chart, which often precedes a bullish reversal. ETH has maintained stability above key support levels, building a case for a possible upward breakout.
Analyst Ali Martinez suggests that contrarian investors might find favorable risk-to-reward ratios at current price levels. If Ethereum breaks out of its consolidation range, buyers who entered at lower prices could see substantial gains.
The next few trading sessions will be critical in determining whether Ethereum can reverse its downtrend or if the sell pressure from whales will continue to dominate the market.
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