Ethereum Crashes 29% in a Week, but Reversal Signals Start to Appear

Ethereum (ETH) has fallen nearly 29% over the past week, trading below $2,000 for the first time since May 2025. The decline accelerated after Vitalik Buterin and other prominent holders moved millions of ETH to exchanges, amplifying retail panic and bearish momentum. The price now faces critical support levels at $2,220 and $2,150, with further declines threatening to push ETH toward $1,671.

Technical analysis shows Ethereum trading below key moving averages and resistance levels, with bearish indicators like the MACD and RSI showing downward momentum. A failure to reclaim $2,365 could open the door for a fresh decline toward $2,150 or even $2,000. Meanwhile, on-chain data highlights growing selling pressure, with realized losses exceeding $1.2 billion in a single 24-hour period.

Exchange inflows have surged as holders prepare for potential selling, with Binance alone seeing 357,000 ETH deposits on February 1. This spike in distribution activity raises concerns about Ethereum's ability to absorb further selling pressure and highlights a shift from accumulation to risk reduction.

Why Did This Happen?

The selling pressure on Ethereum has been driven by a combination of leveraged positions unwinding, ETF outflows, and macroeconomic headwinds. Over $280 million in ETH-related liquidations occurred in a 24-hour period, with long positions dominating the losses. Additionally, institutional outflows from crypto investment products have totaled $1.7 billion in the past week, with Bitcoin and Ethereum ETFs accounting for the largest share.

Vitalik Buterin's ETH sales have also contributed to the narrative-driven sell-off, with the co-founder reportedly selling 6,183 ETH valued at $13.24 million in three days. While Buterin has clarified these are part of a pre-announced funding plan for public goods and open-source projects, the timing of the sales has exacerbated bearish sentiment.

How Did Markets Respond?

The broader crypto market has mirrored Ethereum's weak performance. The total market capitalization rose slightly to $2.65 trillion but remained fragile amid thin liquidity and ongoing leverage unwinding. Bitcoin (BTC) saw a modest rebound, trading above $78,000, but failed to break key resistance levels that have capped upside since early February. Altcoins like BNB and Doge showed uneven recoveries, but most remained well below their 2026 highs.

Ethereum's large holders are also showing signs of stress. Trend Research, a top crypto fund, has reduced its Ethereum holdings by nearly 19% as it attempts to avoid forced liquidation. The firm has sold at least 112,828 ETH through early February, with its remaining position valued at $1.05 billion. This controlled deleveraging highlights the precarious nature of leveraged positions in the current environment.

What Are Analysts Watching Next?

Analysts are closely monitoring key technical levels, on-chain flows, and institutional behavior for potential reversal signals. Ethereum's price currently needs to stabilize above $2,000 to avoid a prolonged bear phase. A break below $2,150 could trigger further liquidations and panic selling, pushing the price toward $1,671.

The Money Flow Index for Ethereum is well below the 20.0 threshold, indicating that selling pressure has likely reached saturation levels. Historically, such readings have preceded short-term relief rallies, suggesting a potential bounce if selling activity subsides.

Exchange inflows and large-holder behavior will also be key indicators. While founder wallets like Buterin's remain active, the more telling signal will be whether large holders increase deposits at exchanges or shift toward staking and cold storage. A shift toward accumulation could signal a turning point for Ethereum's price.

In the broader market, ETF flows and macroeconomic conditions will continue to influence investor sentiment. A sustained outflow from crypto ETFs could signal continued institutional de-risking, while improved risk appetite in global markets may provide support for a recovery.