Ethereum whales have bought $950 million worth of ETH: a signal for a reversal or a temporary bounce?
The price of Ethereum (ETH) has made an impressive 22% rebound from its June low, managing to hold above a key trend line closely watched by institutional investors. This surge coincided with a resumption of capital inflows into spot ETH ETFs, which had previously recorded sustained outflows for several weeks.
Growth Amid ETF Activity
Large holders continued to actively accumulate the cryptocurrency even during the height of the decline, as confirmed by recent on-chain data. However, the rapid increase in the volume of borrowed funds raises doubts about the stability of this success. Analysts are debating whether the market has formed a real bottom or if this is another false bounce within a global downtrend.
On June 14, the Ethereum exchange rate rose above the monthly VWAP (Volume-Weighted Average Price) line. This indicator serves as a dividing line for major players between the accumulation and distribution phases of assets. Previous breakouts of this level led to similar results: after the April breakout above VWAP, the coin rose by 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.
ETF Flows: A Turning Point After a Tough Streak
The shift in sentiment came at a very opportune time. Literally the day after the exchange rate established itself above the VWAP line, on June 15, net inflows into spot ETH ETFs amounted to $22.5 million. This positive result broke a very painful series of declines: from May 11 to June 12, capital outflows were recorded almost daily, with the exception of just two trading sessions. 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 volume of net assets under management is approaching the $10.04 billion mark. The recovery in May also began with small amounts, which then grew into a string 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 taking place directly within the network.
Whales Continue Buying: Signs of Capitulation Subside
Large investors began accumulating coins even before the chart crossed the VWAP line. Whales methodically increased their positions, completely ignoring the local price decline. 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 bought up coins worth a total of about $950 million.
Concurrently, on-chain metrics recorded a decline in seller activity. Mass panic in the market ceased around June 7, when the coin found a local low. It was then that the net change in exchange positions indicator went 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 usually heralds an imminent trend change.
Analysts at Swissblock noted in their latest report that Ethereum has been in a phase of capitulation for a long time. This state of strong market pressure often precedes a powerful reversal in quotes.
Key Ethereum Levels: Cautious Optimism
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 final 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. The 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 is formed only after the complete liquidation of excess leveraged positions. Currently, we are seeing the opposite process — open interest is rising along with the price. This state of affairs indicates the dominance of margin traders, rather than real demand in the spot market. Overloaded longs could trigger a wave of forced liquidations at the slightest downward movement, so it is too early to talk about the end of capitulation.
If a decline begins, the first support level will be $1,624, and the critical point is the low of $1,507. A daily close below this mark will force the market to seek new lows. Only a confident breakout of the $1,851 barrier will help distinguish a true bottom from a temporary bounce.
My professional view: Whale activity and the return of ETF inflows are strong bullish signals. However, I would not rush to declare the formation of a bottom. The derivatives market is overheated, and any negative trigger could provoke a sharp correction. Until we see a sustained decline in open interest against a backdrop of rising prices, every new local high will be questionable.