ETF Funds Exit for 7 Consecutive Days, Even Whales Giving Up? Will Ethereum Eventually Fall to $1,800?

▲ Ethereum (ETH)/AI Generated Image ©

A serious warning light of a massive crash has been lit, indicating that Ethereum (ETH), with its crucial technical support lines and institutional investor confidence simultaneously collapsing, could potentially retreat to the $1,800 level.

According to TradingNews, an investment media outlet, on May 21 (local time), Ethereum continued its decline for five consecutive weeks, showing a sluggish sideways trend around $2,130 during trading hours. Ethereum, which plummeted by 5.81% this week alone, has consistently shown a significant disadvantage of over 200 basis points (bp) compared to Bitcoin each week, solidifying its relative weakness. In particular, the multi-month upward channel's lower support line on the daily chart, which had been the core basis for all bullish arguments since the February crash, was decisively broken downwards this week, eliminating all technical buying justification.

According to the media report, the outflow of funds from institutional investors became the clear trigger for this crash. The Ethereum spot ETF market, centered around BlackRock's ETHA and others, recorded net outflows for an astonishing 7 consecutive days, with over $500 million in capital exiting over the past 9 trading days. Consequently, the Coinbase Premium index, which represents the buying pressure from U.S. institutions, plummeted to minus 0.09, its lowest level since the major crash in February. Experts analyzed that due to the nature of regulated products in the U.S., staking rewards are excluded, leading to a structural limitation where corporate funds are concentrated solely on Bitcoin, thus hindering Ethereum.

To make matters worse, on-chain data and derivative market indicators also point to a catastrophic scenario. In recent weeks, over 60 whale wallets holding more than 10,000 ETH have either reduced their holdings or completely exited the market, causing whale holdings to drop to a 10-month low. In the derivatives market, approximately $1.7 billion worth of liquidation orders are tightly stacked below the $2,044 level for leveraged long (buy) positions. If the current support level breaks, there is a high risk of a cascade of liquidations and margin calls, triggering mechanical forced short squeeze-like selling and a rapid fall to $1,900.

The hawkish stance of the Federal Reserve (Fed) and the deteriorating macroeconomic environment are also adding pressure. With the U.S. 10-year Treasury yield soaring to 4.58-4.62% and the Dollar Index (DXY) maintaining a strong upward trend around the 99.4 level, the attractiveness of risk assets like cryptocurrencies has sharply declined. Ethereum's price is currently completely trapped below all short- and long-term moving averages, including the 20-day Simple Moving Average (SMA) at $2,267.54 and the 200-day SMA at $2,576.86. The daily Relative Strength Index (RSI) has also fallen to the 36-40 range, proving that downward pressure completely dominates the market.

Consequently, for Ethereum to avoid the worst-case fall, it must decisively defend the primary support level of $2,100, and the U.S. Personal Consumption Expenditures (PCE) price index, to be released on Friday, must come in lower than market expectations, bringing a breath of fresh air for macroeconomic easing. If the $2,100 level breaks, liquidation orders will flood the market, pushing the price down to $1,900 and then potentially to the $1,800 refuge, which was the absolute bottom in February. Conversely, for a trend reversal, a weekly close above at least the $2,225 level must precede. Therefore, experts advise that even if a technical rebound occurs for the time being, a conservative risk management strategy of reducing exposure during rallies is more effective than premature chasing of buys.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*