The recent sell-off of Ethereum has prompted an aggressive shift in supply dynamics, indicating a scenario of selective absorption rather than widespread capitulation among holders. As Ethereum’s price saw a retracement from its high of late 2025, macroeconomic pressures combined with losses in altcoins forced many weaker investors to reduce their exposure. This defensive selling intensified as Ethereum approached the critical price range of $1,900 to $2,000, flooding the market with significant volumes of spot liquidity.
In response, significant whale activity countered the selling pressure. Accumulation from these larger holders saw the total ETH balances increase dramatically, rising from approximately 8 million ETH to over 24 million ETH. Concurrently, the realized capitalization surged from nearly $12 billion to above $70 billion. This massive absorption of supply helped to stabilize the downward momentum even as the price continued to print lower lows.
Furthermore, the realized price for these accumulating cohorts initially surged towards $2,600, reflecting their earlier entry points in the market.
Source: CryptoQuant/ X
Despite this accumulation, ongoing buying pressure from the dips resulted in a downward shift in the overall cost basis. Investors interpreted this trend as an encouraging sign of constructive positioning.
Now, the tightening of liquid supply combined with reduced sell pressure raises important questions about whether this accumulation can stabilize Ethereum’s price or merely serve as a precursor to further volatility.
Altcoin Market Faces Liquidity Crisis Compared to Ethereum’s Strength
While Ethereum has attracted whale support, the broader altcoin market has experienced a stark contrast. Over the past year, the cumulative volume of buy/sell transactions for altcoins has plummeted by roughly $180 billion to $210 billion, a clear indication of persistent net spot selling. This imbalance became more pronounced in early 2026, coinciding with a substantial $730 billion contraction in total cryptocurrency market capitalization.
Source: X
As liquidity has drained from speculative tokens, many altcoins have experienced unprecedented declines of 40–90% from their peak values. Simultaneously, Bitcoin [BTC] retraced nearly 19% during February, dropping to the mid-$60,000 range, further reinforcing risk aversion in the market. Futures Open Interest fell sharply from $61 billion to $49 billion, fueling deleveraging in thinner altcoin markets.
Institutional reallocation has put additional pressure on high-beta assets, while retail interest remains subdued. Consequently, Bitcoin’s dominance rose to 58%, signaling a shift towards capital consolidation.
This developing narrative highlights a concentrated accumulation within major cryptocurrencies while altcoins face a phase of structural distribution until broader demand can be restored.
As the market witnesses a defensive capital rotation into major assets, the structural integrity of the altcoin market continues to weaken. Breadth metrics have significantly deteriorated, with nearly 83% of altcoins trading below their 50-week moving average.
This deterioration closely follows Bitcoin’s retracement from its peak of $126,000, which has dampened risk appetite towards high-beta investments.
As persistent downside pressures continued to mount, the sell-off broadened significantly. By February 7, more than 92% of Binance-listed altcoins were trading beneath this critical long-term trend threshold. This extreme divergence points towards forced selling and diminishing spot demand.
Source: Darkforst/ X
Additionally, macroeconomic headwinds have heightened caution among investors. Growing geopolitical tensions coupled with hawkish signals from the Federal Reserve have led to a reduction in speculative positions. Furthermore, expanding token supply has fragmented liquidity even further.
As a result, investors are consolidating into perceived safe assets, which has reinforced the divergence in market behavior—the major cryptocurrencies have absorbed capital flows while altcoins remain under structural pressure.
In summary, the whale absorption suggests potential early-cycle bottom formation as supply tightens and cost basis compresses. However, persistent liquidity fragility and ongoing macro risks keep the door open to further downside movement.
Final Summary
Recent whale absorption and decreasing liquid supply suggest the formation of a potential early-cycle base for Ethereum, even as altcoin markets show signs of structural fragility.
The observed capital consolidation within major cryptocurrencies contrasts sharply with relentless altcoin distribution, providing a support layer for Ethereum but also exposing it to potential macro-driven liquidity shocks.
