Ethereum falls under $2,000 as Vitalik Buterin and insiders transfer millions to exchanges amid low liquidity.

Ethereum co-founder Vitalik Buterin and other notable “whales” have liquidated millions of dollars in ETH since early February, contributing to a market downturn that saw the second-largest cryptocurrency fall below $2,000.

While Buterin’s prominent sales acted as a psychological catalyst for retail panic, a detailed analysis of market data indicates that the main pressure stemmed from a systemic unwinding of leverage and unprecedented selling activity across the network.

Nevertheless, these sales, coupled with substantial offloading by other industry figures, have led investors to question whether project leaders are losing faith or merely managing operational budgets amid significant volatility.

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What prompted Buterin to sell his Ethereum assets?

In the last three days, Buterin sold 6,183 ETH ($13.24M) at an average price of $2,140, as reported by blockchain analysis platform Lookonchain.

Vitalik Buterin ETH Sales (Source: Lookonchain)

However, the details of Buterin’s transactions indicate a strategic approach rather than one driven by panic.

Importantly, Buterin publicly revealed that he had allocated 16,384 ETH, valued at approximately $43- $45 million at that time, to be utilized over the coming years.

He mentioned that these funds are designated for open-source security, privacy technology, and broader public-good infrastructure as the Ethereum Foundation enters what he referred to as a phase of “mild austerity.”

In this context, the most reasonable explanation for “why he sold” is rather straightforward. It seems to be the conversion of a pre-allocated ETH budget into usable runway (stablecoins) for a multi-year funding strategy rather than a sudden effort to time the market peak.

However, the manner in which these sales impact the market is more narrative-driven than liquidity-based. When investors observe founder wallets active on the sell side during a downturn, it skews sentiment and intensifies the bearish resolve of an already fragile market.

Still, Buterin remains a significant ETH holder, possessing over 224,105 ETH, which is roughly equivalent to $430 million.

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Did Buterin’s ETH sales trigger a market crash?

The key question for investors is whether Buterin’s selling mechanically drove ETH below $2,000.

From a structural standpoint, it is challenging to assert that Buterin’s $13.24 million sell program, on its own, breaks a significant market level, given ETH’s multi-billion-dollar daily trading volume.

Thus, a sell order of this size is minor in comparison to typical turnover and lacks the volume necessary to consume order book depth and significantly lower prices independently.

However, Buterin was not selling in isolation. He was part of a wider exodus of large holders that collectively pressured the market.

On-chain trackers indicated notable activity from Stani Kulechov, the founder of the DeFi protocol Aave. Kulechov sold 4,503 Ethereum (valued at approximately $8.36 million) at a price of around $1,857 just hours before ETH’s decline accelerated.

This activity reflects a broader trend. Data from CryptoQuant shows that the network has experienced record selling activity this month.

Ethereum Spot Average Order Size (Source: CryptoQuant)

The analytics firm noted that the network has seen an increase in large whale order sizes during the downturn, indicating that high-net-worth individuals and entities were actively de-risking into the liquidity provided by the decline.

Ethereum Taker Volume (Source: CryptoQuant)

While a single whale cannot crash the market, a coordinated exit by industry leaders can create a self-fulfilling prophecy.

When liquidity is scarce and leverage is high, these “headline flows” signal to the broader market that “smart money” is de-risking, prompting smaller traders to follow suit in an effort to protect their capital.

The true factors behind ETH’s decline

While the narrative centered on founder wallets, the majority of the decline was driven by three distinct market forces: leverage unwinding, ETF outflows, and macroeconomic challenges.

Data from Coinglass indicated hundreds of millions of dollars in ETH liquidations over 24 hours during the peak of the downturn, with long liquidations predominating.

This created classic cascading conditions where price drops trigger forced sales from overleveraged positions, which in turn lead to further declines and additional forced selling.

At the same time, institutional support diminished. US spot ETH ETFs have recorded approximately $2.5 billion of net outflows over the past four months, according to SoSo Value data.

This occurred alongside much larger outflows from Bitcoin ETFs. This represents the kind of institutional de-risking that is more significant than any individual wallet when the market is already declining.

Compounding these crypto-specific issues is the macroeconomic environment.

Reuters linked the broader crypto downturn to a cross-asset selloff and concerns over tighter liquidity. The crypto market has lost about $2 trillion from its peak in October 2025, with roughly $800 billion wiped out in the last month alone, as investors reduced risk and leveraged positions unwound.

Indicators to monitor

As the market seeks to establish a floor, three indicators will be more significant than any whale alert.

The first is liquidation intensity. If forced liquidations remain high, ETH can continue to “gap” lower even without further discretionary selling.

A decrease in liquidation totals alongside stabilization is often the initial sign that the cascade has exhausted itself, according to Phemex analysts.

The second is the ETF flows regime. A single day of outflows is noise, but a multi-week trend alters the marginal buyer. ETH’s near-term trajectory heavily relies on whether institutional flows stabilize or continue to bleed into broader risk-off behavior.

Finally, investors should observe exchange inflows and the behavior of large holders.

Founder wallets are visible, but the more telling indicator is whether large holders increase deposits at exchanges (distribution) or whether coins move into cold storage and staking (accumulation). When those signals reverse, the market typically follows.

The conclusion remains that Vitalik Buterin’s sales are best interpreted as the execution of a pre-announced funding strategy linked to public goods and open-source spending, rather than a sudden loss of confidence.

However, in a collapse driven by leverage liquidations, ETF outflows, and macro risk-off, even “small” founder sales can have outsized impacts.

They do so not by providing enough ETH to breach $2,000, but by adding narrative fuel to a market already looking for reasons to sell first and ask questions later.

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