$396 mln ETH moves: Are Ethereum whales preparing for another sell-off?

 While the broader market has experienced significant upside volatility, Ethereum has closed at lower lows for two consecutive days. 

After it was rejected at $2.4k, the altcoin dropped to a low of $2.3k and is now testing that level of support. With the market showing some signs of weakness, Ethereum whales and institutions have increased selling activity.

Paradigm Capital deposits $27 million in ETH

After Ethereum [ETH] failed to hold $2.4k towards the end of April, institutional investors stepped back from the market. 

The Coinbase Premium Index has remained negative for 10 consecutive days, suggesting U.S. institutional investors have turned bearish. 

Paradigm Capital is one such institution. According to Lookonchain, four wallets linked to Paradigm Capital deposited 11,615 ETH, worth $27.29 million, into FalconX.

Such a move to deposit to exchanges suggest preparations to sell. Although not sold yet, the firm is likely to sell.

Coupled with that, individual whales have also turned to exchange deposits. According to Lookonchain, Garret Jin, also known as BitcoinOG1011 (short), just deposited 166,023 ETH, worth $396 million, into Binance.

Given the deposit, it seems Garret Jin is also most likely preparing to sell. If these assets are sold, it will put significant pressure on the market, leading to potential price drops. 

Ethereum sell-side activity surges

Although Garret Jin and Paradigm Capital have yet to close their positions entirely, Ethereum is facing significant sell-side pressure.

On the 6th of May, Ethereum’s Exchange Netflow rose to a monthly 160.9k ETH, with 983.3k ETH entering exchanges. This trend persisted at press time, with Netflow remaining positive at 7.4k ETH.

Netflow at such extreme levels suggests sellers have been highly active. As a result, supply on exchanges has also increased significantly.

Exchange Supply Ratio made a significant trend reversal, rising from 0.121 to 0.122 over two consecutive days. The rising ESR signaled increased sell-side activity, while buyers have slowed down significantly.

Often, a higher exchange supply has strengthened downside risk, leading to lower prices.

What momentum indicators say

With selling pressure overwhelming the market, downside momentum has slightly strengthened. Ethereum’s Directional Movement Index (DMI) formed a bearish crossover, with +DI falling below ADX.

With the momentum indicators set as they are, this suggests that although the market trend is strong, bullish pressure has weakened significantly.

Thus, the trend grew faster than the bullish momentum. However, with the -DI holding both the ADX and the +DI below, it suggests buyers still have a slight edge over the market.

Thus, if sellers manage to push bullish pressure aside, ETH could drop below $2.3k and reach $2,250 in the short term. However, for a bullish continuation, +DI needs to flip ADX, strengthening the upside.

In doing so, ETH will flip $2.4k again and eye another move towards $2.5k.

Final Summary

• Four wallets linked to Paradigm Capital deposited 11,615 ETH, worth $27.29 million, while Garret Jin deposited 11,615 ETH, worth $27.29 million. 
• ETH faces weakening bullish pressure amid a shift in sentiment among institutional investors.