Ethereum Faces 50% Drop Risk as Whales Take Profits, ETFs Struggle

Ethereum's price has been struggling to regain levels above $2,000, despite recent bullish attempts. Market analysts suggest that there is a significant possibility that Ethereum could experience another 50% drop to $1,000 as some early investors, known as "whales," are engaging in heavy profit-taking.

Amid the overall market uncertainty, Ethereum continues to face selling pressure as bulls struggle to maintain control over the $2,000 level. Crypto analyst Ali Martinez has advised investors to exercise caution before building new positions in ETH. Martinez noted that if bulls fail to hold the Ethereum price above $2,050, it could risk falling further to the next support level at $1,500, and potentially even lower to $1,095.

Blockchain analytics platform SpotonChain reported that a major ETH whale has secured a massive profit of $65.66 million, marking a staggering 4,156% return on investment. The whale, identified as “0x086,” acquired the ETH from platforms like Changelly, Bitfinex, ShapeShift, and Binance at an average cost of just $46.3 per token back in March 2017. The whale deposited its entire ETH holdings of 34,125 ETH to a crypto exchange a few hours ago at an average Ethereum price of $1,970.

Currently, ETH whale activity remains mixed, with some big players moving their holdings from exchanges to staking to earn additional yield. These are typically long-term ETH holders who are holding onto their assets with a strong conviction.

Despite Ethereum's price eyeing a relief rally past $2,000, there has been no major relief for spot Ethereum ETFs. Outflows have continued, highlighting a major drop in institutional sentiment. BlackRock’s head of digital assets, Robbie Mitchnick, explained that the ETFs could have performed better if they had included staking, noting that the absence of this feature made the launch “less perfect.”

Mitchnick suggested that a staking yield is a meaningful part of how investment returns can be generated in this space. All the Ether ETFs, at launch, did not have staking capabilities. On Thursday, crypto asset manager Bitwise filed a proposal to introduce staking on Ethereum ETFs. The New York Stock Exchange has proposed amendments to allow the listing and trading of shares for the Bitwise Ethereum ETF, incorporating staking capabilities.

In summary, Ethereum's price is facing significant downward pressure due to heavy profit-taking by early investors. Analysts warn of a potential 50% drop to $1,000 if bulls fail to maintain control above $2,050. The recent activity of a major ETH whale, who secured a massive profit, adds to the market uncertainty. Additionally, the lack of staking capabilities in Ethereum ETFs has been cited as a reason for their underperformance, with proposals now being made to introduce staking to improve their attractiveness to investors.