Ethereum Price Drops 10% as Long-Term Investors Accumulate

Ethereum (ETH) has been experiencing notable price fluctuations, with the cryptocurrency trading within a narrow range between $1,900 and $1,750. This period of intense selling pressure has led to a steady decline in Ethereum's price, currently hovering around $1,876. Despite the bearish sentiment, on-chain data reveals a counter-narrative: the number of Ethereum holders continues to grow, suggesting that while short-term traders might be exiting their positions, long-term investors are seizing the opportunity to accumulate ETH at what they perceive as undervalued levels.

According to on-chain analyst Murphy, ETH accumulated between January and February 2025 has a holding cost between $3,200 and $3,500, with a significant concentration of addresses accruing 1.66 million ETH at $3,475. This group opted not to liquidate their positions even as ETH plummeted to $1,900, choosing instead to increase their holdings to 1.94 million ETH and lower their cost basis to $3,150. Furthermore, ETH collected in mid-February showed a cost basis of approximately $2,600 to $2,800, with early selling occurring below $2,300. Currently, only the chips acquired at $2,800 and $2,630, totaling 1 million and 850,000 ETH respectively, remain in their original positions. A decline under $2,000 has resulted in diminished demand, reflecting weak buying power as new investors hesitate.

Murphy notes that significant holders, after an extensive self-rescue strategy, appear to be exhausting their buying capacity. The latest touchpoint at $1,850 aligns with prior accumulation costs from two years ago, prompting potential re-buying to average down costs. Should support at this level falter, downturns could test historic support levels at $1,600 and $1,250. Ultimately, the vital task for investors remains reaching a consensus on ETH’s valuation to avert further resistance from accumulated chips.

The divergence in investor behavior can be attributed to the actions of different investor segments. Institutional investors and so-called “whales” (individuals or entities holding large amounts of cryptocurrency) are likely gradually accumulating Ethereum, while retail traders, perhaps driven by fear or uncertainty, are capitulating. This pattern of accumulation by large players could potentially lay the groundwork for a future price recovery, provided that the selling pressure eventually subsides and broader market conditions become more favorable.

Crucial support levels to monitor include $1,850 and $1,750, zones that have historically served as significant areas of demand. If the selling pressure intensifies, Ethereum might test the $1,750 region, another level that has previously acted as a strong accumulation zone. These support levels represent potential battlegrounds between buyers and sellers, and their ability to hold or break could significantly influence Ethereum’s short-term price trajectory.

Conversely, if Ethereum manages to stabilize and reclaim the psychologically important $2,000 mark, it could trigger a significant shift in market sentiment. The Aroon indicator, a technical tool used to measure trend strength, currently signals weakness, confirming that ETH remains in a downtrend. However, a breakout above the 50-day moving average, currently around $2,365, would be a strong indication of renewed bullish momentum, suggesting that buyers are regaining control.

Ethereum's price is also approaching a major resistance zone between $2,250 and $2,610, where significant selling pressure has historically been observed. This resistance zone could act as a barrier to further price increases, and a breakout above this level would be a strong bullish signal. The current period of uncertainty presents both risks and opportunities, underscoring the need for careful analysis and informed decision-making in the volatile world of cryptocurrency. Traders and investors should closely monitor key support and resistance levels, as Ethereum’s next significant move will likely have a ripple effect on the broader market sentiment, influencing the direction of other digital assets as well. The future trajectory of Ethereum will likely depend on several factors, including a potential shift in market sentiment, an easing of the prevailing selling pressure, or a broader improvement in the overall cryptocurrency market.