Ethereum whales have accumulated $950 million: a bottom signal or a temporary bounce?
Ethereum (ETH) has bounced 22% from its June low, holding above a key trend line for institutional investors. This rally coincides with renewed capital inflows into spot ETH ETFs, which had recorded weeks of outflows. However, beneath the surface of this growth lies a worrying signal: a rapid increase in leverage is casting doubt on the sustainability of the current rally.
Large holders continued to actively accumulate the cryptocurrency even during the downturn, as confirmed by recent on-chain data. On the other hand, the rapid rise in leverage raises questions about the stability of this success. Therefore, experts are debating whether the market has formed a true bottom or if this is another false bounce within a broader downtrend.
Ethereum Holds the Monthly VWAP Line Again
On June 14, Ethereum's price rose above the monthly VWAP line. This volume-weighted average price serves as a dividing line for large players between the accumulation and distribution phases of assets. Previous breakouts of this indicator led to similar outcomes: after breaking above VWAP in April, the coin rose 19%, and the May breakout brought a more modest 7% gain.
Notably, in both cases, capital inflows into spot ETFs resumed a few days after the breakout. This dynamic suggests that institutions begin actively buying at the first signs of an uptrend. Of course, it's difficult to establish a direct causal link here, as events may simply reflect general market optimism. Nevertheless, the correlation repeats regularly, so investors should closely monitor fund statistics.
Spot ETF Flows Turn Positive Again After a Tough Streak
The shift in sentiment came at a very opportune time. Literally the day after the price established itself above the VWAP line, on June 15, net inflows into spot ETH ETFs reached $22.5 million. This positive result broke an extremely painful losing streak. Between May 11 and June 12, capital outflows were recorded almost daily, with only two trading sessions as exceptions. For comparison, the situation looked much better in early May: on May 1, funds attracted $101 million, and on May 5, another $98 million.
Currently, the total net assets under management are approaching the $10.04 billion mark. The recovery in May also started with small amounts, which then grew into a series of successful days. Consequently, if a market bottom is confirmed, we could see a repeat of this positive scenario. However, relying solely on ETFs would be a mistake, as key processes are now occurring directly on-chain.
Whales Continue Buying, Signs of Capitulation Fade
Large investors began accumulating coins even before the chart crossed the VWAP line. Whales steadily increased their positions, completely ignoring the local price drop. According to analysts at Santiment, since June 10, the balances of millionaire wallets have grown from 124.85 million ETH to 125.4 million ETH. Thus, in just one week, they purchased coins worth a total of approximately $950 million.
Concurrently, on-chain metrics recorded a decline in seller activity. Mass market panic subsided around June 7, when the coin found a local low. It was then that the net position change on exchanges turned negative, signaling an outflow of coins from trading platforms.
This investor behavior indicates a transfer of cryptocurrency to cold wallets for long-term storage. This trend is supported by large whales who are quickly buying up any available volumes. As a result, a seller deficit has formed in the market, which typically foreshadows an imminent trend change.
Analysts at Swissblock noted in their recent Altcoin Vector report that Ethereum has been in a capitulation phase for a long time. This state of intense market pressure often precedes a powerful price reversal. The current reduction in exchange balances confirms that the acute selling phase appears to be truly behind us. Nevertheless, the overall picture is significantly marred by the situation in the derivatives market.
Key Ethereum Levels Emerge
Currently, Ethereum is trading around $1,771, holding above the monthly VWAP, which is at the $1,705 level. Since the beginning of June, the coin has gained about 22% from its low of $1,507, but this is still insufficient for a definitive reversal.
To confirm an uptrend, buyers need to close a daily candle above the resistance at $1,851. This would allow the asset to return to its previous trading range. The main danger now lies in excessively high leverage. Total open interest in ETH futures has jumped from $8.86 billion to $9.96 billion, and at its peak exceeded $10.27 billion.
Typically, a reliable foundation for growth forms only after the complete liquidation of excess leveraged positions. Currently, we are witnessing the opposite process—open interest is rising along with the price. This situation points to the dominance of margin traders rather than genuine demand in the spot market. Overloaded long positions could trigger a wave of forced liquidations at the slightest downward move, so it is too early to talk about the end of capitulation.
If a decline begins, the first support will be the $1,624 level, and the critical point will be the low of $1,507. A daily close below this mark would force the market to seek new lows. Only a confident break above the $1,851 barrier will help distinguish a true bottom from a temporary bounce.
My analysis: The $950 million accumulation by whales and the resumption of ETF inflows are undoubtedly positive signals. However, the rise in futures open interest against the backdrop of a still fragile price recovery indicates a high proportion of speculative capital. Until the market digests the excess long positions, any upward movement will be vulnerable to a sudden correction. We will only see the true bottom after leverage is reduced to comfortable levels.