Ethereum’s recent price decline has been shaped by a combination of macroeconomic pressures, deleveraging in the derivatives market, and diminishing liquidity. This has led to a notable drop in Ethereum’s value, with the cryptocurrency falling below the $1,980 mark on February 21. This price action compressed the profitability across various holder groups, indicating a challenging environment for investors.
This decline did not happen in isolation; it came after a period of sustained distribution and a general decrease in risk appetite, particularly among major holders. As prices weakened, unrealized losses began to be felt across the board, impacting whale cohorts that control between 1,000 and 100,000 ETH. The current spot price of Ethereum has now dipped below the key price point of $2,075, which marks the cost basis for many large holders, signifying losses even for the biggest addresses in the market.
While long-term holders are hovering around their breakeven points, short-term investors are facing significant unrealized losses, averaging nearly 50%. Remarkably, despite this pressure, on-chain data suggests that there has been a relatively restrained selling behavior. Trends in realized capitalization indicate that whale investors are holding their assets rather than distributing them, signaling a potential strategy of accumulation rather than a wholesale exit from the market.
Historically, periods of cohort-wide stress like this can serve as a precursor to bottom formations, where the pain of unrealized losses leads to eventual accumulation as market conditions stabilize.
In a related development, Ethereum co-founder Vitalik Buterin has resumed sales from his linked wallets amidst these broader losses impacting whale investors. Notably, this trend isn’t new; a couple of weeks prior, Buterin had already made smaller ETH sales, indicating a systematic approach rather than an impulsive liquidation. His recent withdrawal of 3,500 ETH, valued at approximately $6.95 million from Aave, represents a continuation of this pattern and can be seen as treasury rebalancing rather than a sign of capitulation.
These measured movements differ significantly from distress selling, which typically involves large volumes entering the market rapidly. Instead, the current trend suggests a more cautious approach to managing losses. While founder sales can often sway market sentiment, the scale and nature of Buterin’s recent activity indicate prudent portfolio adjustments in a market facing challenges.
Moreover, current market assessments reveal that speculation is leaning towards continued weakness in ETH prices, as indicated by the sentiment in Kalshi markets. Nonetheless, the restrained sell behavior from whales and Buterin’s careful positioning could point toward a foundational shift in the Ethereum market, where strategic holding may pave the way for future recovery as market conditions evolve.