A series of notable recent losses has shaken market confidence in Ethereum, coinciding with a decline in available supply. This scenario presents a potential for disorder, which may result in erratic price fluctuations for the token. Trend Research, under the leadership of Jack Yi, has established one of the most significant leveraged positions in Ethereum within the market. That was a $2.6 billion ETH long constructed using loans from Aave. The transaction represented a significant wager on the potential appreciation of ETH, amplified by the use of leverage. The position has now been completely closed out. On-chain data indicated that Trend Research liquidated its complete ETH holdings this month, generating $1.74 billion to settle existing loans. The outcome was a recorded loss of approximately $750 million. The fund’s wallets currently possess a total of slightly more than $10,000 in assets, comprised entirely of $10,000 in USD Coin and minimal exposure to ETH.
The supply of Ethereum held on exchanges has decreased to levels reminiscent of mid-2016. Based on data, total ETH reserves across all exchanges stand at approximately 16 million ETH. This aligns with the same level of supply observed during Ethereum’s inaugural year of trading. At that point, ETH was just beginning to gain traction. Currently, it represents a multi-trillion-dollar ecosystem. The contrast with Bitcoin is noteworthy. As BTC exchange balances have returned to levels seen in 2019, Ethereum has experienced a contrasting trend. OTC balances have increased to some extent, yet they remain modest when compared to exchange supply. If the liquidity in exchanges continues to diminish as significant players exit, the process of price discovery may face instability.
Nonetheless, some individuals are choosing to remain engaged. Despite the circumstances, Bitmine, supported by Tom Lee, acquired 20,000 ETH valued at $41.98 million on February 8th. In a separate transaction, the Infini exploiter capitalized on the market dip, investing 13.32 million DAI to purchase 6,316 ETH at a price of $2,109. This occurred prior to the allocation of funds via Tornado Cash. Ethereum was priced at $2,077 at the time of reporting. The token experienced a decline from its recent peaks around $3,300, reflecting a decrease of approximately 37%. The daily RSI registered at 31.22.
The strength of the trend remains high, as indicated by the ADX reading of 50.01. Bearish pressure prevailed as –DI (35.77) remained significantly above +DI (6.78). The selling volume has increased amid the downturn, with daily volume approaching 39.7K ETH. Ethereum experiences a decline as exchange balances reach 16 million ETH. Even modest flows have the potential to drive price movements significantly.