Whales Buy Deeper as ETFs Retreat, Hiding Ethereum's Split Path

Big Ethereum holders, often referred to as “whales,” have continued to accumulate the cryptocurrency over the past five months, increasing their collective holdings by 14%, according to on-chain analytics firm Santiment. This surge in buying activity is occurring amid recent volatility, including a sharp dip in Ethereum’s price to $4,200 earlier this month, before a modest recovery to $4,304 as of the latest data. While the broader market has shown mixed signals, these large investors are viewing the current price level as an attractive opportunity to add to their positions.

The whale accumulation has been driven by two distinct groups. “Mega whales,” who hold more than 10,000 ETH, initially fueled Ethereum’s rally earlier in August with net inflows reaching 2.2 million ETH in 30 days. However, this group has since paused its buying activity, suggesting a shift in strategy. Meanwhile, whales holding between 1,000 and 10,000 ETH have resumed accumulation, adding 411,000 ETH in the same period, indicating continued confidence in Ethereum’s long-term prospects. This contrast highlights the evolving dynamics within the Ethereum investor community, with some choosing to take a more cautious approach while others remain aggressive.

The current buying trend, however, is not reflected in the institutional market. U.S. spot Ethereum ETFs have experienced significant outflows, with $787.6 million leaving the products over four days in late August and early September. Grayscale’s ETHE and Fidelity’s FETH were among the hardest hit, recording outflows of $309.9 million and $216.7 million, respectively, on September 5 and 4. These outflows represent a sharp reversal from the $3.87 billion in inflows recorded in August, when Ethereum ETFs dominated institutional crypto flows. Analysts suggest the recent outflows reflect profit-taking after strong inflows, rather than a loss of confidence.

The diverging trends between ETFs and whale behavior underscore the complex nature of market sentiment. While large investors are accumulating ETH, institutional investors appear to be rotating capital toward Bitcoin ETFs, which are seen as a safer bet amid macroeconomic uncertainty and a soft labor market. Ethereum’s inability to stake its holdings in U.S. ETFs has also been cited as a factor making it less appealing in risk-off environments. Despite these concerns, Ethereum’s fundamentals remain strong, with staking growth, decentralized finance (DeFi) activity, and overall network health continuing to support its long-term value proposition.

Big Ethereum holders are currently facing an unrealized loss of $1.72 million as the price remains below previous support levels. A pseudonymous analyst known as Mrvik.eth has noted that Ethereum is in a minor distribution phase, having lost the 1D 25EMA support level. This trend raises concerns that further turbulence could unfold before Ethereum stabilizes, particularly as the broader altcoin market shows signs of weakness. With several cryptocurrencies already underperforming, the risk of an extended correction phase remains a key challenge for the ecosystem.