Ethereum co-founder Vitalik Buterin and other prominent “whales” have dumped millions of dollars of Ethereum since early February, adding narrative fuel to a market rout that has seen the world's second-largest cryptocurrency drop below $2,000.
Although Mr. Buterin's high-profile sales were the psychological trigger for retail panic, a closer look at market data suggests that the main pressure came from systematic de-leverage and record sales activity across the network.
Nevertheless, these disposals, combined with significant selling by other industry players, have led investors to question whether project leaders are losing confidence or are simply managing runway operations amid extreme volatility.
Why is Buterin selling his Ethereum holdings?
According to blockchain analytics platform Lookonchain, Buterin sold 6,183 ETH ($13.24 million) in the past three days at an average price of $2,140.
But a look at the details of Buterin's trades reveals a calculated strategy rather than a panic-driven one.
Notably, Buterin publicly revealed that he had set aside 16,384 ETH, worth approximately $43 million to $45 million at the time, to be deployed over the next few years.
He said the funds will go towards open source security, privacy technology and broader public interest infrastructure as the Ethereum Foundation enters a period of what he described as “mild austerity.”
Seen from this perspective, the most defensible explanation for “why he sold'' is a mundane one. This appears to be less a sudden attempt to hit the top of the market and more of a conversion of a pre-allocated ETH budget into a usable runway (stablecoin) for a multi-year funding plan.
However, the channels through which these sales impact the market are narrative-driven rather than liquidity-based. When investors see founder wallets active on the sell side during a downturn, sentiment tilts and deepens the bearish resolve of an already volatile market.
Still, Buterin is still an ETH whale, holding over 224,105 ETH, worth about $430 million.
Did Buterin's ETH sale cause the market crash?
The central question for investors is whether Buterin’s selling mechanically pushed ETH below $2,000.
From a structural perspective, it's hard to argue that Buterin's $13.24 million sale program itself broke through major market levels, considering ETH's multi-billion dollar daily trading volume.
Therefore, a sell order of this size is small compared to normal volume and does not have enough volume to consume order book depth and drive the price significantly lower.
But Buterin wasn't just selling. He was part of a broader exodus of large holders that weighed on the market as a whole.
On-chain trackers have flagged significant activity by Stani Kulechov, founder of DeFi protocol Aave. Hours before ETH's decline accelerated, Kulechov sold 4,503 Ethereum (worth about $8.36 million) at a price of about $1,857.
This activity is a symptom of a broader trend. According to CryptoQuant data, the network is facing record sales activity this month.
The analytics firm noted that the network saw an increase in big whale order values during the downturn, suggesting that high-net-worth individuals and entities were actively risk-averse to the liquidity created by the decline.
While no single whale can collapse a market, the mass exit of industry leaders could create a self-fulfilling prophecy.
When liquidity is thin and leverage is high, these “headline flows” signal “smart money” risk mitigation throughout the market, encouraging smaller traders to follow suit to preserve capital.
The real cause of the ETH crash
Although the story focused on the founders' wallets, the crash was largely driven by three different market forces: unwinding leverage, ETF outflows, and macroeconomic headwinds.
According to data from Coinglass, the worst moves saw hundreds of millions of dollars in ETH liquidations in 24 hours, with longer liquidations dominating.
This created a classic cascade situation where price declines caused forced sales from overleveraged positions, which in turn caused further declines and additional forced sales.
At the same time, institutional support evaporated. The U.S. Spot ETH ETF has recorded net outflows of approximately $2.5 billion over the past four months, according to data from SoSo Value.
This occurred alongside larger outflows from Bitcoin ETFs. This represents more important institutional risk aversion than any wallet at a time when markets are already falling.
Further complicating these crypto-specific issues is the macroeconomic context.
Reuters linked the widespread decline in cryptocurrencies to concerns about declines among assets and a liquidity squeeze. The crypto market has lost about $2 trillion since its peak in October 2025, with about $800 billion wiped out in the last month alone, as investors reduced risk and leveraged unwinding of positions.
Metrics to watch
When markets are trying to find a bottom, three indicators are more important than any whale alarm.
First is liquidation strength. If forced liquidations remain high, ETH may continue to “gap” down even without additional discretionary sales.
According to Phemex analysts, a decline in total clearings due to stabilization is often the first sign that a cascade is burning out.
The second is the ETF flow regime. A single day's outflow is noise, but if it continues for several weeks, the marginal buyers change. The near-term path of ETH will largely depend on whether institutional capital flows stabilize or continue to spill over into broader risk-off behavior.
Finally, investors need to keep an eye on currency inflows and the actions of large shareholders.
Founders' wallets are visible, but a more obvious indicator is whether large holders increase their deposits on the exchange (distribution) or whether their coins move to cold storage and staking (accumulation). When these signals reverse, the market usually follows.
The bottom line is that Vitalik Buterin's sales are best understood not as a sudden loss of credibility but as the execution of pre-announced funding plans tied to public goods and open source spending.
But in collapses caused by leverage liquidations, ETF outflows, and macro risk-offs, even “small” founder sales can have a disproportionate impact.
They do it not by supplying enough ETH to break through $2,000, but by adding narrative fuel to a market that is already looking for reasons to sell first and ask questions later.
