Even with the market shifting to a risk-on stance, a definitive rotational flow remains elusive. Historically, this arrangement maintains a capital-heavy position in Bitcoin, restricting momentum into alternative assets. Although this cycle appears similar at first glance, a crucial metric may be signaling something different at this moment. On the daily charts, Ethereum dominance has been showing strong resilience. Following the late-November decline to 11.5%, four lower highs have created a setup for a rebound towards 13%, coinciding with ETH’s sideways movement in the $3k-$3.5k range. In summary, ETH’s consolidation near support could be indicative of a larger trend.
Chart indicates that Ethereum whales are actively defending their $2,796 cost basis, which reflects the realized price for long-term holders, as the price has rebounded from that level on three separate occasions. In a parallel trend with Ethereum dominance, it’s evident that ETH’s fluctuations around the $3k mark have been bolstered by whale activity. The pressing inquiry at this juncture is whether ETH’s ROI genuinely supports these stances or begins to elevate the risk of capitulation. Ethereum whales maintain their positions despite the absence of macroeconomic support. In the absence of a macro catalyst, it seems that bulls could be relying heavily on their conviction.
Ethereum whales showcased this phenomenon in a striking manner. Since November 21, they have amassed 4.8 million ETH, representing 4% of the circulating supply, while increasing their holdings from 22.4 million to 27.2 million. Thus, it’s not unexpected that Ethereum dominance and the whales’ realized price align with this timeframe, reinforcing ETH’s support from whales. As a result, their $2,796 cost basis has emerged as a crucial level to monitor. At the current price, these whales are holding approximately $4.8 billion in profits.
The key metric to keep an eye on is Ethereum’s Estimated Leverage Ratio, which has reached a six-month high of 2.964. In straightforward terms, for each $1 of ETH held without leverage, there exists approximately $2.96 of borrowed exposure. Consequently, with leverage accumulation, the absence of macro catalysts, subdued rotational flows, and persistent high volatility, the risk of whales retreating continues to be significant. Ethereum is now exposed to the risk of another liquidation cascade. Ethereum whales are steadfastly protecting their $2,796 cost basis, maintaining their position amid stagnant price movements and sitting on approximately $4.8 billion in unrealized profits. With rising leverage (ELR at 2.964) and weak rotational flows, ETH remains vulnerable to a potential de-leveraging cascade.