Ethereum (ETH) is experiencing heightened volatility as large whale activity causes a significant sell-off, driving the price to a weekly low. Ethereum whales, holding between 1,000 and 10,000 ETH, sold off 60,000 ETH worth over $200 million on December 18th. This sell-off, combined with rising positive netflows to exchanges, signals a strong market shift, putting ETH under pressure.

Ethereum’s Price Takes a Hit

At the time of writing, Ethereum was trading at $3,683, marking a sharp 4% drop within 24 hours and a 6% decline over the past week. Despite these losses, ETH has still managed to maintain a 17% gain on the monthly charts, reflecting its longer-term strength. However, the recent dip saw total liquidations reach $124 million, with $108 million attributed to long liquidations. This forced many buyers to close their positions, contributing to a decrease in the ETH price.

Whale Selling Pressure Drives Ethereum Price Down

According to data from IntoTheBlock, Ethereum whales reduced their holdings significantly on December 18th. Whales holding between 1,000 and 10,000 ETH saw their total holdings fall from 13.47 million ETH to 13.41 million ETH. This 60,000 ETH sell-off, valued at over $200 million, further increased selling pressure on the market. Since whales control 57% of Ethereum’s supply, their actions can have a notable impact on price movements. As whales sold off large amounts, a downward trend in ETH’s price became more pronounced, especially with the lack of immediate buying activity.

Exchange Inflows Surge Amid Selling Activity

The surge in exchange inflows further underscores the selling pressure. Netflows to exchanges hit their highest point in a week, reflecting the increase in liquidations and the growing supply of ETH on the market. This intensified selling saw Ethereum’s price dip from $3,900 to about $3,500, and the risk of further declines looms if buying activity doesn’t pick up.

Institutional Demand Slows

Ethereum’s institutional demand had been strong throughout December, particularly as inflows to Ethereum-based spot ETFs increased. However, this momentum appears to be slowing, with total inflows reaching only $2.45 million on December 18th, the lowest since late November. Additionally, the Grayscale Ethereum Mini Trust saw $15 million in outflows—the first negative flow since November. A slowdown in institutional demand could be a key factor contributing to Ethereum’s price struggles, potentially leading to further declines if this trend continues.

The Key Supply Zone: $3,800 to $3,900

Looking ahead, Ethereum faces significant resistance in the $3,800 to $3,900 price range, an area where 2.59 million addresses purchased 4.85 million ETH. If ETH buyers re-enter the market, the $3,800-$3,900 range will likely act as a major hurdle. Traders could choose to book profits at this zone, limiting further upside potential. However, if Ethereum breaks past this supply zone, it could pave the way for further gains, targeting higher resistance levels.

Derivatives Market Signals Bearish Sentiment

Despite Ethereum’s price struggles, speculative activity in the derivatives market remains high. Although open interest in Ethereum derivatives dropped by 4%, trading volumes surged by 30%, signaling continued market activity. Ethereum’s open interest is currently $27 billion, just 6% below its all-time high. Interestingly, most derivative traders are holding short positions, as indicated by the long/short ratio of 0.91, suggesting a prevailing bearish sentiment in the market.

Conclusion

Ethereum is facing significant short-term challenges as whale activity, exchange inflows, and weakening institutional demand contribute to the recent sell-off. With the price hovering around $3,683, ETH’s ability to recover depends on its ability to hold support levels and break through key resistance at $3,800-$3,900. Traders will need to watch for signs of renewed buying interest or risk further declines in the near term.

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