Most of Ethereum selling pressure was provided by retail sellers
Following the successful merge update, large Ethereum holders began to rapidly redistribute their holdings in the market, which could have been the main source of the massive selling pressure that pushed the price of ETH to July levels.
In the past six days, addresses holding from 1,000 to 10,000 ETH have dropped 2.24% of their cumulative holdings, which, considering their relative size on the market, is a noteworthy spike in selling pressure.
Despite the high liquidity of the Ethereum markets and one of the largest market capitalizations, market makers could not deny the massive sell-side trading volume that affected the asset’s price.
The chart provided by Santiment suggests that accumulation ahead of the Merge was mostly speculative and investors did not aim to hold the asset after the update, since such a rapid increase in selling pressure cannot be completely natural.
The “sell news” narrative appeared on the market a few weeks before the date of the merge. However, a few days before the update, the sentiment changed to “buy news” for unknown reasons.
A shift in investors’ mindsets was most likely the precise reason why Ethereum rallied by more than 10% a few days ahead of the update implementation. Unfortunately, almost immediately after the PoW algorithm became obsolete, Ether started to lose its value on the market.
The technical outlook for ETH is also disappointing as the asset has broken below the 50-day moving average and is no longer in an uptrend. Trading volume has remained stable, indicating that the trend has not faded yet, and we could be heading towards new lows, especially if the cryptocurrency market does not recover in the near future.