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Why is Ethereum dropping even though institutions are buying billions?
Current Market Position
Ethereum currently faces a challenging macroeconomic environment. The asset trades near $2,925, representing a significant retraction from its year-to-date high of $4,960. While the token posted a modest 2.76% weekly gain, the price action remains suppressed. This weakness stems largely from strategic liquidations by legacy holders, creating a ceiling on short-term rallies.
The Bearish Case: Strategic Liquidations
Arthur Hayes, the founder of BitMex, has contributed to recent volatility. Blockchain data confirms Hayes liquidated nearly $2 million in ETH in a single day, pushing his monthly sales over $5 million. However, investors should interpret this contextually. Hayes is not exiting the cryptocurrency market; he is rotating capital. He is reallocating funds into higher-beta protocols like Pendle, Ethena, and Ether Fi while retaining a $22 million core position in Ethereum. This suggests a portfolio restructuring rather than a loss of faith in the ecosystem.
The Bullish Case: The $1.67 Billion Accumulation
Contrasting these sales, sophisticated capital is aggressively buying the dip. Since November 4, a single whale entity has accumulated $1.67 billion in Ethereum. This creates a massive floor of demand.
Simultaneously, Tom Lee’s BitMine continues to absorb supply. The firm added 436,361 tokens in the last 30 days. BitMine explicitly aims to control 5% of the circulating supply to generate passive income through staking yields. This signals strong institutional conviction in Ethereum’s utility as the backbone for stablecoins and tokenized real-world assets (RWA).
Technical Outlook and Key Levels
The technical structure requires caution. A “death cross” occurred in November, where the 50-day moving average fell below the 200-day moving average, a classic indicator of momentum shifting to the downside.
- Bearish Pattern: Charts display a flag pattern that often precedes further consolidation.
- Critical Support: The key level to watch is $2,622. If buyers fail to defend this price, the market could see a capitulation toward $2,000.
Strategic Assessment
The market is currently fragmented. Short-term traders are reacting to technical weakness and individual seller liquidity. However, long-term value investors are ignoring the noise to lock in supply. The direction of the next trend depends on whether this institutional accumulation can absorb the selling pressure before technical support breaks.