Ethereum – Analyzing the Reasons behind $123M ETH Dump by Institutions

Ethereum – Examining why these institutions dumped $123M in ETH

Amidst the current bear market scenario, Ethereum (ETH), the second-largest digital currency globally, is witnessing a continuous selling spree by institutions and large holders, leading to considerable price plunges across various trading platforms.

Recent information posted by X (formerly known as Twitter) highlighted a massive sell-off by institutions involving 55,035 ETH valued at $123 million on the Binance exchange during the Asian trading session.

Massive ETH Sell-off by Institutional Players

Insights from on-chain data providers unveiled that the major players behind this sell-off were Wintermute, a prominent algorithmic trading entity, and Metalpha, a digital asset management firm.

Wintermute offloaded 46,947 ETH valued at $104.74 million, while Metalpha sold 8,088.8 ETH worth $18.05 million within a brief span of two hours. Such substantial selling activities have the potential to influence the price movement of the altcoin.

Possible Drivers of the Recent Sell-off

The reasons attributed to this sell-off include the prevailing bearish market sentiment, the sustained accumulation of ETH on exchanges, and the continuous downtrend in Futures Open Interest over the past three months.

According to statistics from CryptoQuant, the ETH reserves on exchanges have been steadily growing since August 28, hinting at a possible transfer of assets by whales, investors, or institutions for a potential sell-off.

Moreover, data from CoinGlass indicated a consistent decline in exchange Futures Open Interest, suggesting the closure of long positions or expiration of Futures contracts without new positions being established.

It is worth noting that September typically tends to be a bearish period or a phase of market correction for cryptocurrencies before a potential upsurge in October.

Technical Analysis and Crucial Levels for Ethereum

An evaluation of price movements revealed ETH retracing to its key support level of $2,140. This level has been a robust support zone for Ethereum since late 2023.

Additionally, the Relative Strength Index (RSI) for ETH exhibited a bullish divergence on the daily timeframe, indicating a potential reversal in the ongoing trend.

Given the recent support retest and the bullish divergence formation, there is a high probability that the price of ETH may witness a surge of approximately 25% to 30% towards $2,500 or $2,550.

Optimistic Signals from On-chain Metrics

Short-term analysis of ETH also manifested some positive signals.

The ETH Long/Short ratio from CoinGlass showcased an optimistic sentiment, reflecting a ratio of 1.168 on a four-hour timeframe (a value above 1 signifies a bullish stance).

Further data disclosed that 53.88% of leading traders held long positions, while 46.12% maintained short positions during this period.

Moreover, there was a 1.80% rise in total ETH Futures Open Interest, indicating active participation from traders as ETH revisited its sturdy support level.

Performance of Ethereum’s Price

Presently, ETH was trading in the vicinity of the $2,280 mark, registering a 2% decline over the past 24 hours.

Simultaneously, the trading volume surged by nearly 100% during the same timeframe, signaling heightened engagement from traders and investors.

 

Leave a Comment