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Ethereum’s price saw a significant decline on Monday, driven by a continued risk-off sentiment in both the cryptocurrency and stock markets. Adding to the bearish pressure was the capitulation of a major whale, who sold a substantial amount of ETH at a considerable loss.

Ethereum Price Performance and Market Capitalization

Ethereum (ETH) dropped to $2,400 on Monday, down from its monthly high of $2,732. This decline wiped out approximately $35 billion from its market capitalization, which fell from $325 billion on May 14 to $289 billion. The pullback reflects broader market concerns and profit-taking by investors after recent gains.

Whale Capitulation: A Key Driver Behind the Drop

The recent sell-off was exacerbated by a whale’s capitulation. According to blockchain data, this large holder withdrew 7,000 ETH, worth $16.8 million, at a significant loss. Previously, the same address had withdrawn 13,479 ETH valued at $48.82 million between December 5 and January 13. Despite these transactions, the whale still holds 6,479 ETH, realizing a cumulative loss of $16.28 million.

Positive Fundamentals Amid Market Weakness

Although Ethereum’s price has faced headwinds, its underlying fundamentals suggest a potential rebound. On-chain data reveals a growing trend of ETH being transferred out of centralized exchanges and into self-custody wallets. According to recent metrics, tokens held on exchanges dropped by 3.46% on Monday, reaching 23.47 million. The total supply of ETH on exchanges has also declined to 19.45%, a bullish indicator signaling that investors are not planning to sell in the short term.

Ethereum Network’s Expanding Assets

Another encouraging factor is the steady growth of assets on the Ethereum network, despite broader market challenges. For instance, the USD Institutional Digital Liquidity Fund (BUIDL) has experienced a remarkable uptrend in 2023. Its assets under management have surged to $2.9 billion, up from $640 million at the start of the year. This growth highlights increasing institutional interest and confidence in Ethereum-based products.

Technical Analysis: Key Levels to Watch

From a technical perspective, Ethereum’s price chart shows significant movement. After bottoming out at $1,380 in April, ETH rallied to $2,732 last week before retreating as investors took profits. Despite the recent dip, the asset remains above its 50-day and 100-day Exponential Moving Averages (EMAs), which are nearing the formation of a mini golden cross—a bullish signal for future price action.

The pullback aligns with the 50% Fibonacci retracement level, suggesting that ETH could be in the second phase of an Elliott Wave pattern. If this outlook holds, Ethereum may rebound and potentially retest the 78.2% retracement level at $3,527 in the longer term. However, a drop below the critical $2,000 support zone would invalidate this bullish scenario and point to further downside risks.

Key Takeaways for Investors

  • Ethereum’s price decline was driven by a combination of market sentiment and whale activity.
  • On-chain metrics, such as decreasing exchange balances, indicate potential bullish momentum over the long term.
  • Institutional interest in Ethereum-based products, such as BUIDL, continues to grow.
  • Technical indicators suggest a possible rebound, but key support levels must hold to sustain the bullish outlook.

As the cryptocurrency market develops, keeping an eye on Ethereum’s fundamentals and technical indicators will be crucial for investors. While short-term volatility may persist, Ethereum’s network growth and adoption remain strong signals of its long-term potential.

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