ether $ETH$2,113.11 It has recently come under fire from all angles, with selling pressure coming from all corners of the market, including Ethereum founder Vitalik Buterin and derivative traders, pushing it below $2,000.
The second-largest cryptocurrency is currently trading around $1,950, down 60% since August and 42% since January 14.
Its woes can be partially attributed to what analysts are calling the recent crypto bear market, but $ETH It has itself underperformed other large-cap stocks such as BTC, XRP, and ADA, declining nearly 35% since mid-January.
The divergence from peers was fueled by Vitalik Buterin's wave of selling and, more recently, by derivatives traders.
On-chain analysts pointed out that companies are offloading large amounts of data. $ETH In a decentralized derivatives venue to repay Aave's loan.
Approximately 47,000 wallets were sold $ETH ($120 million) in the last four days, approximately 31,700 of which $ETH According to data shared on MLm on-chain, it was completed in just 5 hours.
There's still nearly 50,000 left. $ETH Approximately $86 million USDC is held with Aave as collateral borrowed against Aave. and $ETH Although falling, the position is currently hovering near liquidation, forcing more selling to stay above water.
This is a feedback loop similar to what Ethereum holders have experienced before. Prices fall, collateral weakens, debts are paid off, and so on. $ETH Go to market.
$ETH are falling harder than others
Part of Ether's particularly sharp decline is that it remains the go-to asset for cryptocurrency leverage. $ETH They are often the first to sell.
But it also reflects a market that is struggling to find reasons to buy now.
Former White House communications director Anthony Scaramucci believes that $ETH is struggling due to institutional investors' bias against Bitcoin.
“What happens when financial institutions come in is they're probably going to buy the oldest assets,” Scaramucci said in an interview with OANDA. “And that's Bitcoin. Now, are you going to say they might buy Ethereum? I'd say yes… But I think institutions in general would prefer something like Bitcoin. And I'm not saying it won't become popular over the next few years, but that's where it is right now.”
There are also corners of the market that attempt delta-neutral trades, buying the spot. $ETH They then lend it out on platforms like Aave, while simultaneously selling the asset short on futures. These traders have no directional exposure, but if funding rates become skewed, they may need to increase their short positions, which could increase selling pressure.
Buyers of government bonds feel it too.
One of the most optimistic developments for Ethernet over the past year has been the rise of so-called Ethernet. $ETH Finance company — a company that buys and holds stock. $ETH With MicroStrategy style betting.
The idea was that companies would provide a new layer of long-term buyers, absorbing supply and creating a market floor.
That's not really happening.
and $ETH Now down more than 50% since August, many of these companies are sitting in losses, piling up at prices that seemed reasonable at the time but are painful in hindsight.
Tom Lee's BitMine (BMNR) is the most well-known example. Lee has consistently been an ether bull, and BitMine's $ETH This position is argued to be strategic rather than speculative.
BitMine currently holds 4.29 million $ETH A token worth $9 billion, with a 57% stake and yield. A total of $16.3 billion was invested, with $7.3 billion in unrealized losses, according to Dropstab data.
The company bought an additional $100 million in stock earlier this month, buying that dip. $ETH Although priced at $2,300, this purchase failed to stem the steady flow of selling pressure. $ETH After that, it fell below $2,000.
But it's difficult to play the role of a “strong hand” when an asset continues to fall and everyone else is selling on the weak side.
Rather than acting as support, these government bond holdings are starting to look like a new overhang. It's not because they're being sold off today, it's because the market knows they're trapped.
There are no obvious buyers.
The current issue with Ether is not a single wallet or a single liquidation.
That means selling pressure is coming from everywhere, with founders reducing exposure, leveraged traders unwinding, and underwater holders looking for an exit.
Ethereum remains the leading smart contract platform. Nothing has changed.
However, in this market, $ETH We do not trade based on fundamentals. It's being traded like an asset that no one wants to catch.
Except for Tom Lee obviously.
