Analysis of Institutions Dumping $123M in Ethereum: What’s Behind It?

Ethereum has been experiencing lackluster price movements recently, prompting speculation about institutional activities in the market. The world’s second-largest cryptocurrency, Ethereum (ETH), has been facing continuous sell-offs by institutions and major holders, leading to significant price declines.

According to reports, institutions recently offloaded a substantial amount of ETH, totaling 55,035 ETH valued at $123 million, to Binance during the Asian trading session. Notable players in this sell-off included Wintermute, a prominent algorithmic trading firm, and Metalpha, a digital asset manager, who collectively sold 46,947 ETH worth $104.74 million and 8,088.8 ETH worth $18.05 million, respectively, within a span of two hours. Such massive sell-offs have the potential to impact the price of the altcoin significantly.

The reasons behind this sell-off are attributed to the prevailing bearish market sentiment, the continuous increase in Ethereum reserves on exchanges, and the decline in Futures Open Interest over the past three months. Data from CryptoQuant indicates a consistent rise in Ethereum reserves on exchanges since August 28, suggesting a possible preparation for a sell-off by whales, investors, or institutions.

Additionally, CoinGlass data shows a continual decrease in exchange Futures Open Interest, indicating either the closure of long positions or the expiration of Futures contracts without new positions being established. It is noteworthy that September is historically considered a bearish month for cryptocurrencies, often preceding a potential surge in October.

Technical analysis of Ethereum reveals a retest of the crucial support level at $2,140, a level that has historically served as strong support for ETH since late 2023. Furthermore, the Relative Strength Index (RSI) for ETH has formed a bullish divergence on the daily timeframe, signaling a potential trend reversal.

On-chain metrics also point towards a bullish outlook for Ethereum, with indicators such as the ETH Long/Short ratio signaling positive sentiment. At present, 53.88% of top traders hold long positions, while 46.12% hold short positions. Moreover, total ETH Futures Open Interest has increased by 1.80%, reflecting trader participation as ETH revisits its strong support level.

As of the latest data, Ethereum is trading near the $2,280 mark, experiencing a 2% decline in the last 24 hours. Despite the recent price drop, trading volume has surged by almost 100%, indicating increased activity from traders and investors in the market.