Ethereum (ETH) recently experienced a significant dip, triggering a flurry of activity among large holders, commonly known as whales. On-chain data indicates that these whales have been strategically buying the dip, accumulating a substantial amount of ETH during the market downturn. However, some analysts suggest that a further drop to the $2,700 level could still be possible, raising concerns about whether current accumulation levels will be enough to prevent it.
Whales Accumulate During the Dip
As Ethereum's price fell roughly 13% between January 19 and January 21, whale holdings increased from approximately 103.42 million ETH to 103.71 million ETH. This accumulation represents close to $360 million worth of ETH being bought near the dip, signaling strong confidence among large investors at these price levels.
One notable transaction involved Trend Research, which borrowed 70 million USDT from Aave and used approximately $75.5 million to purchase 24,555 ETH. Following this purchase, Trend Research's total ETH holdings reached 651,310 ETH, valued at around $1.92 billion. Additionally, an over-the-counter (OTC) whale wallet, labeled 0xFB7, acquired 20,000 ETH worth about $58.8 million through institutional trading desks FalconX and Wintermute.
Potential Downside Risks
Despite the significant whale accumulation, some analysts remain cautious, pointing to the possibility of a further decline towards the $2,700 level. More Crypto Online, for example, suggests that Ethereum's recent decline strengthens a downside forecast targeting the $2,250 to $2,260 area. The analyst believes the latest drop adds weight to the view that price action has started a move toward that lower zone after Ethereum failed to sustain a recent rebound.
Currently, Ethereum faces resistance near the $3,146 to $3,164 range, where a substantial amount of ETH was previously accumulated. Approximately 3.44 million ETH was accumulated in this zone, and many holders are near breakeven, which could turn this area into strong resistance. Overcoming this resistance will be crucial for Ethereum to demonstrate strength and potentially reverse the current trend.
Accumulation Cost and Market Structure
The "Accumulating Addresses Realized Price," which measures the average cost basis for wallets that steadily accumulate ETH, has been steadily climbing, acting as a structural band under price action. Many on-chain analysts estimate this accumulation cost area to be in the $2,700 to $2,800 range. While this zone can act as a technical and psychological floor, a significant drawdown could put it to the test.
Ethereum is trading within a wide consolidation zone between $2.7k and $3.5k. ETH remains below the 100-day and 200-day moving averages and is capped by a significant supply zone around the $3.5k region. A daily close above the $3.5k zone and the 200-day MA would be the first real signal of strength.
Factors Influencing Price Action
Broader market sentiment and developments in the financial sector also play a role in Ethereum's price action. Recent regional tensions have led some investors to move capital to traditional safe-haven assets, impacting the cryptocurrency market. However, increased trading volume could signal the potential for a price rebound if more inflows enter the market.
In conclusion, while Ethereum whales have been actively buying the dip, accumulating a significant amount of ETH, the possibility of a further drop to the $2,700 level cannot be ruled out. The strength of accumulation, resistance levels, and broader market conditions will all play a crucial role in determining Ethereum's short-term price trajectory.
