Ethereum (ETH) has faced intense pressure since breaking above $3,000 support a week ago. With a sustained downward spiral, Ethereum touched a low of $2.1K and then stabilized around $2.2K.
At the time of writing, ETH was trading at $2,266, down 1.51% on the daily chart, extending its one-month downtrend.
With the market under intense stress, ETH’s weakened structure has caused holders, especially Ethereum whales, to capitulate.
Ethereum whales deleverage to repay their loans
Amid a prolonged market decline, Trend Research and Garrett Jin continued to dump ETH to repay loans and avoid liquidation.
According to Lookonchain, these two entities deposited a total of 316,185 ETH, worth $738 million, on Binance for sale. Jin sold $82.37 million worth of ETH over the past day, while Trend Research sold $76.4 million worth of ETH.
Such a sale constitutes a risk-driven market exit aimed at reducing debt burden and improving market health, thereby reducing liquidation risks.
At the same time, Bitcoin OG (10/11) also continued to sell ETH. Onchain Lens reported that the whale deposited 15,000 ETH, worth $33.35 million, into Binance to sell and repay the loan.
Usually, forced deleveraging creates additional selling pressure, further accelerating downside risk.
Selling Pressure Hits Weekly High
With the whales deleveraging, the selling pressure on ETH has increased significantly. Thus, the supply of Ethereum on exchanges has increased significantly, as evidenced by the Exchange Supply Ratio (ESR).
According to data from CryptoQuant, ESR reached a weekly high of 0.138, at press time, a substantial reversal from the previous trend.
Source: CryptoQuant
When ESR increases, it suggests that most market participants have increased their supply-side activity. Such market behavior reduces scarcity, thereby further weakening the market.
Additionally, exchange inflows reached a two-month high of 2.3 million on February 3 before falling back to 210,000.
Source: CryptoQuant
These massive inflows validated the early observation of increased pressure on the sales side, often a prelude to a drop in prices like that observed recently.
Is ETH at risk of falling below $2,000?
Ethereum has been facing intense selling pressure from all market participants, primarily due to the forced exit of whales. These current conditions have pushed ETH into a significantly weakened position.
As a result, the altcoin has fallen below its parabolic SAR and medium-to-long-term Fibonacci Bollinger Bands (FBB), at the time of writing, indicating strong downward momentum.
Source: TradingView
Typically, when ETH holdings are below these two levels, it signals a continuation of the dominant trend. So, if the selling pressure persists, ETH could fall below $2,000 with the FBB lower boundary at $1,796 acting as support.
However, despite the price drop, Ethereum Treasury Bitmine held strong and continued to accumulate at lower prices.
According to Lookonchain, Bitmine purchased 20,000 ETH, worth approximately $46 million. With these purchases, Bitmine positions itself as the central pressure absorber.
Source: Lookonchain
Therefore, if Bitimine continues to hold and add positions despite increasing losses, it will provide support, preventing further declines.
To avoid this downward spiral, ETH bulls need to reclaim the parabolic SAR at $2,656, which will pave the way for a move towards $3,000.
Final Thoughts
- Ethereum extended its bearish streak and was hovering around $2.2k.
- ETH faced intense selling pressure as whale borrowers deleveraged, selling $771 million worth of ETH to repay their loans and reduce the risk of liquidation.
