Ethereum in a Downturn... Whales Aggressively Buy 360,000 ETH

▲ Ethereum (ETH), crypto whale/ChatGPT generated image

Ethereum (ETH) has entered a short-term correction trend. However, large investors reportedly purchased an additional $832 million worth of Ethereum during the downturn. While the excessive leverage burden in the derivatives market has decreased, the buying speed of long-term holders has slowed, and Ethereum's price is testing its direction between whale buying pressure and long-term investors' caution.

BeInCrypto reported on May 12 (local time) that Ethereum's price fell 3.6% since May 10, pushing it back into the downtrend channel that began on April 17. However, the holdings of Ethereum whale wallets, excluding exchanges, increased from 124.69 million ETH to approximately 125.05 million ETH during the same period. The increase was 360,000 ETH, with a market value of approximately $832 million based on the article.

The whales' purchases are noteworthy because they occurred during a price decline. BeInCrypto analyzed that if whales had judged that a significant downward breakout was imminent, they would likely have reduced their exposure, but this time they increased their holdings instead. This move was interpreted as reflecting confidence that Ethereum's short-term bearish pattern might not lead to a larger decline.

Derivatives indicators were also presented as a backdrop for whale buying. Ethereum perpetual futures open interest decreased by approximately $480 million, from $12.46 billion on May 7 to $11.98 billion on May 12. Meanwhile, the funding rate remained high, increasing from 0.010% on May 7 to approximately 0.012%. BeInCrypto explained that the simultaneous decrease in open interest and high funding rates indicate that it was not an excessive buildup of new long positions, but rather the liquidation of short positions.

However, the movements of long-term holders differed from those of whales. The net position change of Ethereum long-term holders peaked at 383,128 ETH on April 27 and then decreased to 77,675 ETH on May 11. The decrease rate is approximately 80%. While long-term holders have not stopped net buying, they have reduced their buying speed to about one-fifth compared to late April. BeInCrypto analyzed that long-term holders are refraining from aggressive buying as high funding rates are interpreted as a sign of market overheating.

From a technical perspective, $2,298 was presented as a short-term pivot point. If Ethereum closes a daily candle below this price, the Fibonacci 0.618 retracement level of $2,269 will be exposed as the next support. Subsequently, $2,227 and $2,174 were also mentioned as downside targets. Conversely, if it recovers $2,327, it could return to a neutral zone, and if it surpasses $2,363, the short-term structure would shift from neutral to bullish, with $2,422 suggested as the target zone.

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