Ethereum (ETH) buyers appear to be buying the dip as whales may return to accumulation. While ETH remains under $2,700, it has sparked hopes of a bigger recovery with stablecoin inflows.
Ethereum (ETH) drew in a large share of inflows, with both stablecoins and ETF buying. The activity increased on a weekly basis as ETH dipped to a lower range, and signaled that there were funds available to “buy the dip.”
ETH traded at $2,641.81, after another day of relative strength for Bitcoin (BTC), down from its recently recovered level above $2,800.
In the case of Ethereum, buying was slightly more active than the acquisition of BTC as traders started accumulating more tokens near the lower price range. ETH drew in $793M on a weekly basis, while BTC purchases reached $407M.
Is ETH returning to bullish sentiment?
The recent ETH accumulation happens at a time when the token broke to new lows against BTC, sinking to 0.027 BTC. At the same time, smart money bought the dip, with some buying near last week’s lows of $2,080.
The behavior of whale buyers reflects the current smart money sentiment, which is much more bullish than retail traders.
$ETH Sentiment
CROWD = Bearish 🟥
MP | #SmartMoney = Bullish 🟩 #Ethereum
Check out sentiment and other crypto stats at https://t.co/HQDyBNuzek#Crypto #Marketprophit pic.twitter.com/XTfV8BpbRx— Market Prophit (@MarketProphit) February 10, 2025
The sentiment recovery arrives after ETH traders capitulated, clearing the way for a new price direction. During past price capitulations, ETH saw significant exchange outflows, while boosting accumulation.
The latest market correction led to a peak outflow of ETH from exchanges and into accumulation wallets. Another 476K ETH flowed into ETH accumulation addresses as of February 6, with more signs of buying and holding.
The balance of ETH on accumulation addresses is near peak values, holding 19.28M ETH. The trend of adding tokens to self-custody wallets accelerated in December but went vertical in the past few weeks.
The reason for this is that ETH has been in an accumulation zone, and whales can afford to buy the dip. At the same time, sentiment for ETH was near an all-time low, given the sluggish price performance and the uncertain direction of the Ethereum Foundation.
In the past three months, the Ethereum ecosystem saw the biggest inflows and outflows, by virtue of carrying some of the most active bridges. The chain retained over $736M in new liquidity out of the gross inflows of $15B.
Is ETH due for a short squeeze?
One key source of ETH price predictions is an eventual short squeeze after traders bet on an ongoing price slide. The expected price move is based on the CFTC CME cash-settled ETH derivatives.
The trend of shorting ETH on mainstream markets started in the past few months and has built up based on ongoing market pessimism. The short positions on the mainstream markets are also not as easily attackable as those on purely crypto exchanges.
Despite the expectations for a breakout, there may be more attacks against long positions. Long positions are at nearly 70%, against 30% shorts, and the short-term expectation is for more of the long trades to be shaken out. Ethereum derivatives also hover at a lower open interest, at $11.12B.
Centralized exchanges can host inflows from Wintermute and other market makers, who can sway ETH prices and liquidate derivative positions. ETH is traded more cautiously and does not necessarily signal an imminent breakout or a short squeeze.
On mainstream markets, hedge funds and other entities may be making a bet on a global liquidity crunch, which could affect ETH. The size of the bets is also relatively small compared to the ETH market, with little immediate potential to affect the price.
Traders also noticed increased activity from the wallets of market makers, who have enough ETH to cause liquidations on long positions. Activity by Wintermute has affected Ethereum and other assets, as the market maker shifted coins to exchanges to sell and then bought back near the new lows.
In these conditions, ETH leveraged trading may be extremely risky, as traders have made claims of market manipulation.
Wintermute itself showed bullish expectations for Ethereum, predicting a return to prices above $3,500. The market maker thus becomes a part of the whale accumulation trend, possibly preparing for higher prices in 2025.
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