Ethereum, the second-largest cryptocurrency by market capitalization, has been navigating turbulent waters recently. Since its August peak, the digital asset has experienced a significant correction, shedding over 35% of its value since October 6. This sharp double-digit dip has naturally shaken investor confidence, sparking widespread liquidations across the market. Many might view this as a straightforward collapse, yet a deeper look at the on-chain data reveals a far more nuanced and potentially optimistic story. What we're witnessing is not just a price drop, but a fundamental rebalancing of who holds and controls the Ethereum supply.
This period of intense volatility appears to be a classic deleveraging event intersecting with a powerful structural accumulation trend. While older, long-term holders are taking profits and leveraged traders are being purged from the system, a new class of institutional treasuries is quietly, methodically absorbing this available supply. These sophisticated players seem largely indifferent to the short-term panic, viewing the current downturn as an opportunity.
Old Money Sells, Leverage Unwinds
For the first time since early 2021, some of Ethereum's most seasoned investors are distributing their holdings on a significant scale. Data from Glassnode indicates that ETH holders who have maintained their positions for three to ten years have increased their realized spending to over 45,000 ETH per day, measured on a 90-day moving average. This level of activity has not been observed since February 2021, marking a notable shift in their behavior.
These long-term cohorts represent some of Ethereum's earliest and most successful investors. Their increased spending does not necessarily signal panic or a loss of faith; rather, it reflects savvy investors locking in substantial profits amidst market volatility. A compelling illustration of this trend comes from an early Ethereum ICO participant. On November 17, blockchain analytics platform Lookonchain reported that a wallet, dormant for over ten years, transferred 200 ETH, valued at approximately $626,000. This particular wallet had originally invested a mere $310 in the 2014 Initial Coin Offering to acquire 1,000 ETH. Today, the remaining holdings in that wallet would be worth over $3.13 million, representing an astounding 10,097-fold return on investment.
Compounding this "old money" profit-taking is the dramatic unwinding of highly leveraged positions. This period has seen significant liquidations across the board. Prominent trader Machi, for instance, experienced another liquidation as prices tumbled, adding to his total trading losses that now exceed $18.9 million. In a testament to the market's intense and often chaotic volatility, Machi reportedly reopened a new long position on 3,075 ETH, worth $9.6 million, with a liquidation price dangerously close to the current market level. This illustrates the high-risk, speculative nature of the current deleveraging.
Other influential figures, such as Arthur Hayes, were also observed selling portions of their holdings. However, one of the most significant events involved a massive entity dubbed the "66,000 ETH borrowed whale." Blockchain platform Onchain Lens detailed how this entity's highly leveraged Aave V3 position came under severe pressure as ETH prices fell. To avert a forced liquidation, the whale was compelled to withdraw a staggering 199,720 ETH, equivalent to about $632 million. Subsequently, over 44,000 ETH was sent to Binance to close the position. Estimated losses for this single event are believed to exceed $70 million, marking it as one of the largest single risk-off occurrences in this market cycle.
Institutions Absorb the Supply
While some are exiting, the other side of this dramatic redistribution story is the quiet, yet powerful, emergence of institutional-grade buyers. These entities are not speculative traders looking to capitalize on short-term swings; they are long-term accumulators building substantial ETH treasuries. These firms are playing a crucial role in providing a structural floor to the market by systematically absorbing available supply.
Consider BitMine, a digital asset treasury firm chaired by renowned market strategist Tom Lee. BitMine has aggressively expanded its holdings to 3.5 million ETH, which now represents 2.9% of the total circulating Ethereum supply. This places the company well on its way toward its ambitious goal of accumulating 5% of all circulating ETH. BitMine operates not as a hedge fund actively trading cycles, but as an ETH-denominated corporate treasury. Its explicit strategy is to accumulate and stake its supply, transforming what would otherwise be a passive balance sheet asset into a long-term, yield-generating powerhouse. This strategic approach has positioned BitMine as the largest public holder of the digital asset.
SharpLink, another rapidly growing ETH treasury, mirrors this calculated strategy. The firm currently holds 859,400 ETH, valued at approximately $2.74 billion, and has already earned more than 7,067 ETH in staking rewards since mid-2025. Combined, BitMine and SharpLink now control over 4.35 million ETH. Their programmatic accumulation strategy effectively removes this significant portion of supply from the volatile, liquid market, locking it into staking contracts for the long haul. This creates a powerful structural demand that provides underlying stability.
A Mixed Landscape: Retail Exits vs. Institutional Inflows
However, this methodical institutional accumulation stands in stark contrast to a wave of retail-driven exits. Data from SoSo Value indicates that spot Ethereum ETFs are on track for their largest monthly outflow on record, with more than $1.2 billion withdrawn this month alone.
This contraction in retail ETF holdings has contributed to a disorderly and complex liquidity landscape. ETF investors, often more reactive to immediate price movements and headlines, are selling into fear. Leveraged traders are being forcibly liquidated, experiencing painful losses. Simultaneously, long-term holders, having ridden multiple market cycles, are taking substantial profits. Yet, it is precisely this supply from reactive retail investors, unwinding leverage, and profit-taking veterans that new institutional treasuries are programmatically absorbing for strategic, long-term use.
This intricate interplay is why the recent correction has felt so chaotic and unpredictable. Beneath the surface, however, the underlying mechanics show a consistent pattern: a transfer of supply from what can be described as "weak" or "reactive" hands to "strong" and "programmatic" ones. This dynamic is highly consistent with how prior market cycle resets have played out, often preceding periods of significant growth.
The Ethereum Supercycle Thesis
Tom Lee, the executive chair of BitMine, argues that the current market turmoil is not just a passing phase, but a necessary and characteristic stage of an emerging Ethereum "supercycle." Lee draws a direct and compelling parallel to Bitcoin, which he famously recommended to Fundstrat clients in 2017 when its price hovered around $1,000.
"We believe ETH is embarking on that same Supercycle," Lee stated. "To have gained from Bitcoin's 100x run, one had to stomach existential moments. So, current crypto prices are simply discounting a massive future."
This "massive future," according to the institutional thesis, centers on Ethereum's increasingly established and undeniable role as the primary settlement layer for the global digital economy. The bullish case for firms like BitMine and SharpLink is remarkably straightforward: Ethereum is currently the only blockchain where every major crypto economy genuinely settles.
The entire ecosystems of stablecoins, crucial Layer 2 scaling solutions (L2s), sophisticated perpetual derivatives, burgeoning real-world assets (RWAs), and significant institutional custody flows all ultimately plug back into and generate sustained demand for ETH. Lee views the sharp retracements and periods of deleveraging not as structural failures or signs of weakness, but rather as characteristic growing pains of an asset that is rapidly transitioning from pure speculation to undeniable macro relevance.
A Foundation for Future Growth
Taken holistically, the data paints a picture of a market undergoing a large-scale, post-Merge restructuring. This is far more than a simple price drawdown. It represents a profound redistribution event where the supply of Ethereum is migrating from short-term, emotionally reactive participants to long-term, structurally committed institutions and holders. While the immediate volatility can be unsettling, this underlying shift from weak hands to strong, patient ones often lays the groundwork for sustained future appreciation. For those with a long-term vision, Ethereum's recent shake-up might just be its most bullish signal yet, setting the stage for its next major growth phase.
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