Out of Institution? US Investors Dump ETH at Record Price

While retailers are holding or hoarding ETH, on-chain data shows US institutions selling Ethereum at a discount.

Ethereum (ETH) broke below the key price level of $2,100 after a fresh 8% decline amid a heavy market correction. On-chain data now points to a major shift in sentiment among American investors.

In fact, those market participants risked the world’s largest altcoin, even pushing Coinbase Premium to its worst reading since July 2022.

Exit Facility

According to CryptoQuant, the Ethereum Coinbase Premium Index, measured by the 30-day moving average, has fallen to the lowest level since July 2022. The index tracks the price difference between the ETH/USD pair on Coinbase Pro, which is widely used as a proxy for US institutional trading, and the ETH/USDT pair of ETH/USDT which is often considered part of Binance’s Binance.

CryptoQuant said the negative reading on a 30-day basis shows that selling pressure is mostly coming from US companies. While global traders may be holding positions or buying on the decline, US institutions appear to be de-risking or exiting their Ethereum holdings.

The analysis platform revealed that the last time the Coinbase Premium Index reached similar negative levels was during the depth of the 2022 bear market. Based on this comparison, it elaborated on two possible explanations. The other is that the bearish momentum can continue, since the US demand, which is defined as an important driver of the crypto market rallies, is currently absent, which may limit any imminent price recovery.

Another interpretation presented is that such extremely negative premiums have been accompanied by capitulation phases, which can sometimes coincide with local market bottoms once strong selling pressure has ended. CryptoQuant concluded that the level of $ 2,100 represents an important psychological and technical area, and added that the change may require Coinbase Premium to adapt or respond well.

“As long as US investors are selling at a discount compared to the global market, the upward momentum will continue.”

Another Historic Warning Signal

The sharp increase in Ethereum network activity has raised questions about possible market risks. Ethereum’s transfer count rose to 1.17 million on January 29, one of the highest levels recorded in the metric, and represents a sudden, direct increase in transaction activity across the network. A historical comparison reveals that similar spikes have previously occurred at major turning points in the ETH price cycle. In January 2018, for example, a comparable increase in transfer figures coincided with the peak of the market cycle and was followed by a long bear market.

You may also like:

A similar pattern was seen on May 19, 2021, when a large increase in transfers accompanied a large market crash and a correction of higher prices. While high network activity is often associated with increased usage, CryptoQuant said rapid and parabolic increases around price peaks have historically signaled periods of market stress.

Such situations may indicate high volatility, large asset movements, or the distribution of long-term holders moving funds, which may be swaps. Based on these historical examples, the current spike puts the crypto asset in a “high risk” area, where previous patterns have been followed by significant price drops.