Ethereum slips below $2K as whales dump millions – short squeeze risk builds

Ethereum [ $ETH ] has traded within a descending channel since its rejection near $2,300 weeks ago. As a result, the altcoin lost the key $2,000 support level and fell to a local low of $1,954. With $ETH trading below $2,000, large holders appeared increasingly defensive as market weakness persisted.

Why are whales selling Ethereum? Ethereum's [ $ETH ] struggle below $2,000 coincided with a rise in large sell-side transactions. According to Lookonchain, one investor deposited 5,000 $ETH worth $9.8 million into Kraken. The move appeared aimed at limiting further losses. The wallet accumulated 5,003 $ETH two months ago at an average price of $1,999. The transfer locked in an estimated $200,000 loss. Another long-term Ethereum holder sold 5,000 $ETH for roughly $10 million, according to Onchain Lens. The same entity has now offloaded 60,000 $ETH worth $122.25 million in total. 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, these holdings were accumulated between February and April 2024 at an average price of $3,039. If sold, the position would realize an estimated loss of $11.79 million. Three wallets, three different strategies, all pointing the same direction.

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 weak during the recent downturn.

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. The position carried a notional value of approximately $44 million. This was not an isolated case. 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 participation, though it also sets the stage for a short squeeze if sentiment suddenly shifts. Nothing like crowded shorts to make a market feel clever until it doesn't.

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. That scenario could provide momentum for a broader rebound.

Final Summary: Ethereum fell below the key $2,000 level after trading inside a descending channel, weakening short-term market structure. Three large entities moved 21,101 $ETH worth nearly $41.94 million, showing rising whale selling pressure.