Ethereum’s recent 35% sell-off by large holders could indicate a positive trend.

Ethereum is experiencing its most substantial shift since its peak in August.

A significant correction exceeding 35% since October 6 has sparked a crisis of confidence, penetrating the speculative layers of the market and prompting a series of liquidations.

Nonetheless, the on-chain narrative is not merely one of collapse. It represents a large-scale reallocation of control over the ETH supply.

The data indicates a classic deleveraging event coinciding with a structural accumulation trend. This occurs as long-term holders divest and leveraged traders are eliminated, leading to a new category of institutional treasuries that remain unaffected by short-term turmoil, systematically absorbing ETH’s supply.

Older ETH holders divest as leverage unwinds

For the first time since early 2021, older investor groups in Ethereum are distributing their holdings on a large scale.

As per Glassnode, ETH holders with a holding period of 3-10 years have ramped up their realized spending to over 45,000 ETH daily on a 90-day moving average, a level not observed since February 2021.

Ethereum Long-term Holders (Source: Glassnode)

This group consists of some of the earliest and most successful ETH investors. While their increased spending does not indicate panic, it reflects experienced investors taking profits amid market volatility.

A notable instance is the recent activity from a participant in the Ethereum ICO. On November 17, blockchain analysis platform Lookonchain reported that 0x9a67, after over a decade of inactivity, transferred 200 ETH (approximately $626,000).

This wallet had initially invested just $310 in the 2014 ICO to acquire 1,000 ETH, making the current value of the holding exceed $3.13 million, representing a 10,097-fold return.

Simultaneously, this “old money” profit-taking is exacerbated by the disastrous unwinding of leveraged positions.

For context, prominent trader Machi faced liquidation again as prices fell, contributing to total trading losses exceeding $18.9 million. In a demonstration of the market’s extreme volatility, he promptly reopened a new long position on 3,075 ETH ($9.6M) with a liquidation price just below the current market, highlighting the high-risk, chaotic nature of the speculative unwinding.

Adding to the tumult, other notable figures, such as Arthur Hayes, were also observed selling.

The most significant occurrence, however, involved the “66,000 ETH borrowed whale.”

Blockchain platform Onchain Lens reported that the entity’s high-leverage Aave V3 position faced intense pressure as prices declined, necessitating a withdrawal of 199,720 ETH (approximately $632 million) to avert forced liquidation.

The whale subsequently transferred over 44,000 ETH to Binance to close the position. Estimated losses surpass $70 million, marking one of the largest single risk-off events of this cycle.

Institutions absorb the supply

The other aspect of this redistribution is the rise of institutional-grade buyers amassing substantial ETH treasuries. These entities are not traders but accumulators.

BitMine, a digital-asset treasury firm led by market strategist Tom Lee, has increased its holdings to 3.5 million ETH. This accounts for 2.9% of the total ETH supply, positioning the company more than halfway toward its objective of acquiring 5% of all circulating ETH.

BitMine operates not as a hedge fund trading cycles but as an ETH-denominated corporate treasury. Its stated aim is to accumulate and stake its supply, converting a passive balance sheet asset into a long-term, yield-generating powerhouse.

Consequently, the firm has aggressively expanded its ETH holdings and is currently the largest public holder of the digital asset.

SharpLink, another expanding ETH treasury, follows a similar strategy. The firm now possesses 859,400 ETH (valued at $2.74 billion) and has earned over 7,067 ETH in staking rewards since mid-2025.

Together, BitMine and SharpLink now control more than 4.35 million ETH. Their systematic accumulation serves as a structural floor, permanently removing this supply from the volatile, liquid market and securing it into staking contracts.

BitMine and SharpLink ETH Holdings (Source: Strategic ETH Reserve)

However, this deliberate institutional accumulation sharply contrasts with a wave of retail-driven exits.

According to SoSo Value data, spot Ethereum ETFs are on track for their largest monthly outflow on record, with over $1.2 billion withdrawn this month.

Ethereum ETF Flows (Source: SoSo Value)

This contraction has led to a mixed, disordered liquidity landscape.

ETF investors, who tend to be more reactive to price changes, are selling out of fear. Leveraged traders are being forcibly liquidated. At the same time, long-term holders are realizing multi-cycle profits, providing the very supply that new institutional treasuries are systematically absorbing for long-term utilization.

This dynamic is why the recent correction appears chaotic, even as the underlying mechanics of transfer from weak, reactive hands to strong, programmatic ones remain consistent with previous cycle resets.

The Supercycle Thesis

Lee, the executive chair of BitMine, contends that the upheaval is a necessary stage of an emerging ETH “supercycle.” Lee draws a direct comparison to Bitcoin, which he first recommended to Fundstrat clients in 2017 at a price of 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 endure existential moments. [So, current crypto prices] simply discounting a massive future.”

That “massive future,” according to the institutional thesis, is Ethereum’s established role as the primary settlement layer of the global economy.

The bullish argument for firms like BitMine and SharpLink is straightforward: Ethereum is the only chain where every major crypto economy ultimately settles.

The entire ecosystems of stablecoins, Layer 2 scaling solutions (L2s), perpetual derivatives, real-world assets (RWAs), and institutional custody flows all connect back to and generate demand for ETH.

Ethereum’s Economic Demand vs ETH Price (Source: Token Terminal)

Lee perceives the sharp retracements not as structural failures, but as indicative of an asset transitioning from pure speculation to macro relevance.

Collectively, the data illustrate a market undergoing a large-scale, post-Merge restructuring. This is not merely a drawdown. It is a redistribution event where supply shifts from short-term, reactive hands to long-term, structurally committed ones.

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