Ethereum (ETH) has recently experienced a sharp drop, falling below the $2,000 mark for the first time in two years. In the midst of this market turbulence, an unexpected on-chain event has unfolded: a dormant Ethereum whale, who had remained inactive since the initial coin offering (ICO), has reappeared. This whale transferred a staggering 7,000 ETH, worth approximately $13.8 million, to Kraken as Ethereum’s price plunged to $1,760.

Ethereum’s recent drop has erased around $46 billion in market value over the course of a week. At present, ETH stands at $1,917, which represents a 10.64% weekly decline. This makes it one of the worst-performing large-cap cryptocurrencies. Despite this, trading volume surged by 47%, and the relative strength index (RSI) has entered oversold territory. This combination of indicators could make the current price a potential buying opportunity for those looking to buy the dip, but there’s also growing uncertainty regarding whether this decline is set to continue.

Dormant Whale Reemerges

The move by the dormant whale is significant as it coincided with Ethereum’s steep drop to $1,760, its lowest level since October 2023. This whale has been dormant since the ICO, which means this transfer could signal more selling pressure in the future. As of now, the whale still holds a significant 30,070 ETH, valued at approximately $50 million. This massive stash of ETH, if sold, could lead to further downward pressure on the market.

Currently, Ethereum’s market shows signs of struggling to regain momentum. The drop in ETH price has come during a time when broader risk assets are facing turmoil. This has increased the likelihood of more selling from long-term holders, including dormant whales, who may look to liquidate their assets during this downturn. If more sell-offs occur, Ethereum could face deeper corrections in the short term.

Market Conditions and Bearish Sentiment

In addition to the whale’s activities, the broader market downturn has also contributed to Ethereum’s struggles. More than $110 million worth of Ethereum long positions were liquidated in the past 24 hours alone. Negative funding rates on several top exchanges suggest that short sellers are beginning to gain control, further amplifying the bearish sentiment surrounding ETH.

Another concerning factor is the 180-day dormant circulation spike, which reflects a significant increase in long-term holders selling off their ETH. This surge in sell-offs aligns with a broader risk-off market environment and suggests that Ethereum could be in a distribution phase. As more long-term holders exit their positions, the supply of ETH available for sale increases, putting additional downward pressure on the price.

Key Support Zone and Potential Risk of Capitulation

Ethereum’s price has now fallen below its realized price for the first time in two years. The realized price is the average price at which all ETH was last moved on the network. ETH is currently trading at $1,917, below the realized price of $2,058, which means the average holder is now at an unrealized loss. This has pushed the market value to realized value (MVRV) ratio to 0.93, indicating a network-wide unrealized loss of approximately 7%.

Historically, when Ethereum has dipped below its realized price, it has often been seen as a capitulation zone, where many holders are forced to sell their positions. This trend is evident now, as the market reacts to the increased sell-off activity from long-term holders and the recent movements by the dormant whale.

Immediate Support Level

Looking at Ethereum’s price action, immediate support is expected around the $1,592 level. If this support fails to hold, it could trigger more losses, potentially pushing ETH further down toward the $1,400 or lower. The breach of this level would mean that 4.8 million ETH, which is currently held at a profit, would enter the loss territory, likely leading to additional selling pressure.

In conclusion, while Ethereum’s price has shown signs of potential recovery in the past, the market conditions are currently unfavorable, with whales potentially driving further selling. Traders should keep an eye on key support levels and the actions of major players in the market, as they could determine the near-term direction of Ethereum’s price.

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