Ethereum co-founder Vitalik Buterin and other high-profile “whales” have dumped millions of dollars into ETH since early February, adding narrative fuel to a market rout that saw the world’s second-largest cryptocurrency fall below $2,000.
While Buterin’s high-profile sales served as a psychological trigger for retailer panic, a closer look at market data suggests that the main pressure came from a systemic unwinding of leverage and record sales activity across the network.
However, these divestments, combined with significant sales by other players in the sector, have prompted investors to wonder whether project leaders are losing confidence or whether they are simply managing operational avenues in a context of extreme volatility.
Why is Buterin selling his Ethereum holdings?
Over the past 3 days, Buterin sold 6,183 ETH ($13.24 million) at an average price of $2,140, according to blockchain analytics platform Lookonchain.
However, the details of Buterin’s trades reveal a calculated rather than panic-driven strategy.
Notably, Buterin publicly revealed that he had set aside 16,384 ETH, worth approximately $43-45 million at the time, to deploy over the coming years.
He said the funds are intended for open source security, privacy technology and broader public good infrastructure, as the Ethereum Foundation enters what he described as a period of “light austerity.”
With this in mind, the most tenable explanation for “why he sold” is banal. It appears to be the conversion of a pre-allocated ETH budget into usable runway (stablecoins) for a multi-year funding plan rather than a sudden attempt to time the market top.
However, the channel through which these sales affect the market is more focused on storytelling than liquidity. When investors see active founders’ portfolios on the seller’s side during downturns, it tilts sentiment and reinforces bearish resolve in an already fragile market.
Nonetheless, Buterin remains an ETH whale, holding over 224,105 ETH, which equates to approximately $430 million.
Did Buterin’s ETH sales precipitate a stock market crash?
The central question for investors is whether Buterin’s sale mechanically pushed ETH below $2,000.
From a structural perspective, it’s difficult to argue that Buterin’s $13.24 million sales program alone breaches a major market level, given ETH’s multibillion-dollar daily trading volume.
Thus, a sell order of this magnitude is small relative to typical turnover and does not have the volume necessary to consume the depth of the order book and drive prices down significantly on its own.
However, Buterin did not sell its products in a vacuum. It was part of a broader exodus of large holders that collectively weighed on the market.
On-chain trackers have reported significant activity from Stani Kulechov, the founder of the DeFi protocol Aave. Kulechov sold 4,503 Ethereum (valued at approximately $8.36 million) at a price of approximately $1,857 just hours before ETH’s fall accelerated.
This activity is symptomatic of a broader trend. Data from CryptoQuant shows that the network faced record sales activity this month.
The analytics firm noted that the network saw an increase in the number of orders from large whales during the recession, suggesting that high-net-worth individuals and entities were actively de-risking the liquidity provided by the downturn.
While a single whale cannot bring down the market, a synchronized exit from industry leaders can create a self-fulfilling prophecy.
When liquidity is low and leverage is extensive, these “major flows” signal to the market as a whole that “smart money” is reducing risk, incentivizing smaller traders to follow suit in an effort to preserve capital.
The real drivers of the ETH crash
While the talk focused on founders’ portfolios, the bulk of the crash was driven by three distinct market forces: leverage unwinding, ETF outflows, and macroeconomic headwinds.
Data from Coinglass indicated hundreds of millions of dollars in ETH liquidations over 24 hours at the worst of the move, with long liquidations dominating.
This created classic cascading conditions in which price declines trigger forced sales from overleveraged positions, which in turn trigger further declines and additional forced sales.
Simultaneously, institutional support evaporated. U.S. spot ETH ETFs have seen about $2.5 billion in net outflows over the past four months, according to data from SoSo Value.
This happened alongside much larger outflows from Bitcoin ETFs. This represents the type of institutional risk reduction that matters more than any portfolio when the market is already down.
The macroeconomic context aggravates these problems specific to cryptography.
Reuters linked the broader crypto pullout to cross-selling of assets and stronger liquidity fears. The crypto market has lost around $2 trillion from its October 2025 peak, with around $800 billion wiped out in the last month alone as investors reduced risks and leveraged positions unwound.
Indicators to watch
As the market attempts to find a bottom, three indicators will be more important than any whale alert.
The first is the intensity of the liquidation. If forced liquidations remain high, ETH may continue to “sideways” to the downside even without additional discretionary sales.
According to Phemex analysts, a decline in total liquidations alongside a stabilization is often the first sign that the waterfall is depleting.
Second, the ETF flow regime. One day of releases is noise, but a sequence of several weeks changes the marginal buyer. The short-term movement of ETH depends heavily on whether institutional flows stabilize or continue to shift into broader risk-averse behavior.
Finally, investors should monitor foreign exchange flows and the behavior of large operators.
Founders’ wallets are visible, but the most telling indicator is whether large holders increase their deposits at exchanges (distribution) or whether coins are transferred to cold storage and staked (accumulation). When these signals reverse, the market usually follows.
The bottom line remains that Vitalik Buterin’s sales should be understood as the execution of a pre-announced financing plan linked to public goods and open source spending, and not as a sudden loss of confidence.
But in a collapse driven by leverage liquidations, ETF exits, and macro risk aversion, even “small” founder sales can have disproportionate effects.
They do this not by providing enough ETH to break $2,000, but by adding narrative fuel to a market that is already looking for a reason to sell first and ask questions later.
