Around 40% of circulating Ethereum is now trading below holders’ purchase price, creating a clear stress point for traders, market makers, and institutional treasuries. With a large share of supply sitting in unrealized loss, near-term decision-making is increasingly driven by liquidity constraints and positioning rather than purely long-run fundamentals.
On-chain analytics cited by market reports describe a bifurcated whale response. One cohort is accumulating near breakeven levels, with new whale wallets emerging and previously dormant addresses reactivating to add ETH, signaling continued long-term conviction. A second cohort is taking profits or rotating capital, and some whales are actively unwinding leveraged positions, adding directional sell pressure and tightening short-term liquidity. These opposing flows raise execution risk for larger orders and complicate clean price discovery.
Derivatives leverage has risen materially, reflected in elevated estimated leverage metrics referenced in market analysis. The Estimated Leverage Ratio implies greater systemic sensitivity to adverse price moves that can trigger cascading liquidations and concentrated forced selling. Alongside this, spot ETF flows have shown net outflows in recent reporting, pointing to a pullback of some institutional liquidity and enlarging the immediate selling base. In combination, higher leverage and ETF outflows increase the probability of sharp, mechanically driven moves during stress.
Cluster Capital 合伙人 Winslow Strong(@winslow_strong) 9 小时前向 #Coinbase 充值 1900 枚 $ETH 和 307.015 枚 $cbBTC ，总价值 3,262 万美元
其中 ETH 是一个月前提出的，提出价格 $3402.25，cbBTC 是 2025.08-12 期间以 $97936.68 囤积的，若卖出将亏损 390.7 万美元
钱包地址… pic.twitter.com/eyrVtArDs1
— Ai 姨 (@ai_9684xtpa) December 26, 2025
Whale flows, leverage, and liquidity conditions are pulling in opposite directions
DeFi indicators are also leaning risk-off, with Total Value Locked (TVL) reported to have declined. TVL represents the aggregate value of assets locked in smart contracts. A contracting TVL typically reduces on-chain demand and fee income that support network activity and market confidence, weakening the narrative bid during fragile tape conditions.
Ethereum’s supply signals are mixed rather than one-directional. Rising staking and reduced exchange reserves usually imply tighter liquid supply and can be constructive if sustained. At the same time, the reported annual supply growth has rebounded modestly to +0.22%, which complicates the post-Merge deflation narrative and tempers expectations of automatic scarcity-driven upside. Any longer-term supply shock from staking and holder accrual is now competing directly with near-term loss overhang and elevated leverage.
40% of supply underwater, split whale behavior, rising leveraged exposure, and ETF outflows describe a fragile market state. The priority is to track forced-sell thresholds, leverage conditions, and ETF flow momentum, rather than relying solely on structural supply narratives. This is the operational setup where liquidity, not conviction, determines outcomes. Risk-adjusted positioning should be calibrated to liquidity depth and liquidation sensitivity in the near term.
