Ethereum (ETH) price has finally capitulated in favor of the downside after previously struggling to find a bullish footing during the weekend.
Further investigation into its latest performance revealed some key details, including the top beneficiaries of the crash.
A recent analysis conducted by Bravos Research revealed why the Ethereum price has been experiencing short-term sell pressure.
It also noted that a particular cohort of large participants have been buying aggressively in the last 2 months.
The Ethereum price has dropped by over 20% since Monday. Many investors had anticipated a recovery, but weak demand led to a change of tune.
The cryptocurrency registered the highest short positions in history earlier this week, confirming aggressive bearish expectations.
While the aggressive shorts highlighted market sentiment, another major observation contributed to the bearish outcome.
It turns out that long-term Ethereum whales have been aggressively offloading their ETH. A cryptoQuant analysis of Ethereum’s supply by long-term holders revealed aggressive outflows this year.
Elevated prices in the last few months attracted a lot of profit-taking. Long-term whale balances recently dropped to multi-year lows.
These observations contributed significantly to ETH’s struggle to regain a bullish footing.
Long-term holder outflows confirmed profit-taking. They also put the market on edge with concerns that the cycle top might already be in.
The Next Possible Move for Ethereum (ETH) Price
While the selling pressure from long-term holders and short positions has been placing downward pressure on Ethereum (ETH), the data also showed rising demand elsewhere.
Large accounts holding between 10,000 and 100,000 ETH have been aggressively adding to their balances in the last 3 months. Such large inflows have been linked to institutional demand.
In other words, institutions have been taking advantage of the discounted prices lately. This includes Ethereum treasuries such as Bitmine, Bit Digital, and Gamesquare Holding,s among others.
The aggressive demand from these big players suggests a long-term bullish expectation. This outcome also raised the possibility that ETH price might recover similarly to its performance in 2021.
The cryptocurrency had a double top during the previous bull cycle, which was underscored by a major pullback after its May 2021 top, followed by a second top in November of the same year.
Correlation Between Demand from Big Payers and Current Liquidity Cycle
The Bravos Research analysis also highlighted an interesting pattern that may offer insights into what to expect from the Ethereum (ETH) price action moving forward.
The analysis revealed that the institutional demand has been rising as rate cuts dropped in the U.S. As a result, the big players may tap into debt to aggressively build up their positions.
Although it was worth noting that so far, the same companies have maintained low debt. However, the declining borrowing rates may encourage more debt-driven purchases as rate cuts push borrowing rates lower.
Such an outcome could consequently fuel more demand for ETH, but it may also be a double-edged sword.
The same companies may end up aggressively offloading their ETH holdings once rate hikes make a comeback. This means the same companies buying now may trigger the next bear market.
In the meantime, the same companies have been extending the bullish lifeline to the cryptocurrency. The aggressive demand from big players signals bullish expectations in the near term.
