Ethereum slips below $2K as whale selling spikes — one risk stands out

Ethereum [ETH] has traded within a descending channel since its rejection near $2,300 weeks ago. The altcoin has since lost the key $2,000 support level and dropped to a local low of $1,954. With ETH back below the $2K mark, large holders appeared to be playing defense as market weakness dragged on.

Ethereum's [ETH] struggle under $2,000 coincided with a noticeable rise in large sell-side transactions. According to Lookonchain, one investor deposited 5,000 ETH worth $9.8 million into Kraken. The move looked like an attempt to cap further losses. The wallet had accumulated 5,003 ETH two months ago at an average price of $1,999, locking in an estimated $200,000 loss on the way out.

Another long-term Ethereum holder sold 5,000 ETH for roughly $10 million, according to Onchain Lens. The same entity has now offloaded a total of 60,000 ETH worth $122.25 million. Someone's quarterly review is going to be a tough read.

On top of that, a Fenbushi-linked wallet deposited 11,101 ETH worth $21.94 million into Amber Group's deposit wallet. According to Arkham data, those holdings were accumulated between February and April 2024 at an average price of $3,039. If sold at current levels, the position would realize an estimated loss of $11.79 million. Vintage bags, painful exits.

Combined, the three entities moved 21,101 ETH worth nearly $41.94 million to exchanges and deposit wallets. That activity suggested confidence among large holders remained shaky during the recent downturn. Even for the deep-pocketed, conviction is in short supply.

The bearish tone extended beyond the Spot market and into derivatives trading. According to Onchain Lens, one trader opened a 21,948 ETH short position using 10x leverage, carrying a notional value of approximately $44 million. The overall Long/Short Ratio declined to 0.97, indicating that short positions slightly outnumbered longs across the broader market. Even so, traders on Binance and OKX remained relatively optimistic as exchange-specific ratios stayed elevated. Heavy short positioning could discourage fresh participation, but it also raises the possibility of a short squeeze if sentiment flips quickly. Bears stacking tickets, as they do.

Ethereum remained under strong downward pressure at press time. The Average Directional Index (ADX) climbed to 44, while the Negative Directional Index (-DI) stood at 26. Historically, elevated ADX readings during a downtrend have reflected strong trend strength rather than exhaustion. If selling pressure persists, ETH could retest lower support near $1,845. However, a recovery above $2,100 may force short sellers to unwind positions, and that scenario could provide momentum for a broader rebound.