Ethereum (ETH) experienced a sharp decline on Monday, dropping by 3.82% to around $2,400 amid broader market weakness and investor caution. The drop comes after a significant whale capitulation and reflects a wider risk-off sentiment affecting both crypto and traditional equities.
Whale Sells at a Loss, Realizing Millions in Losses
One of the largest contributors to Monday’s plunge was a major ETH holder offloading their position at a loss. Blockchain analytics platform Lookonchain revealed that the whale in question withdrew 7,000 ETH worth $16.8 million, realizing a $16.28 million loss in the process. This came after prior withdrawals of 13,479 ETH valued at $48.82 million between December 5 and January 13.
Despite selling a substantial portion, the address still holds 6,479 ETH, underscoring a partially intact position but with limited room for recovery without a market rebound.
Market Cap Wipeout and Exchange Balance Signals
The market reacted swiftly, with Ethereum’s market capitalization plunging by $35 billion from $325 billion on May 14 to $289 billion. However, on-chain metrics paint a potentially bullish picture. Data from Nansen shows a 3.46% drop in ETH held on centralized exchanges on Monday, bringing the total to 23.47 million ETH, or 19.45% of the total supply.
Historically, declining exchange balances are seen as a positive sign, as they indicate investors are moving assets to self-custody often signaling reduced short-term selling pressure.
Ethereum Network Growth Remains Strong
Amid the volatility, Ethereum’s ecosystem is continuing to expand. A notable example is BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which is built on Ethereum. The fund’s assets have risen from $640 million on Jan. 1 to $2.9 billion, suggesting institutional confidence in Ethereum’s infrastructure even during market pullbacks.
Technical Outlook: Is ETH Poised for a Rebound?
From a technical perspective, ETH remains above its 50-day and 100-day Exponential Moving Averages (EMAs), which are on the verge of forming a mini golden cross a bullish signal. The recent correction came after ETH tested the 50% Fibonacci retracement level, hinting at a possible continuation of an Elliott Wave cycle.
If ETH holds above the $2,000 support level, analysts suggest it could rebound toward the 78.2% Fibonacci retracement level at $3,527 over the longer term. However, any decisive break below $2,000 would invalidate this bullish setup and could trigger further downside.
Ethereum’s price drop highlights the fragility of market sentiment amid macroeconomic uncertainty and whale movements. While short-term pressure remains, on-chain metrics and institutional growth indicators offer signs of underlying strength. Investors will be closely watching for a recovery or further sell-offs as the market digests recent events and monitors the next technical and fundamental signals.
