Institutional exit? US investors are dumping ETH at a record pace

While retail traders hold or accumulate ETH, on-chain data shows US institutions are selling Ethereum at a discount.

Ethereum (ETH) broke below the crucial $2,100 price level after another 8% decline amid a severe market correction. Data on the chain now points to a major shift in sentiment among U.S. investors.

In fact, these market participants are aggressively de-risking the world’s largest altcoin, even pushing Coinbase Premium to its most negative value since July 2022.

Institutional exit

According to CryptoQuant, the Ethereum Coinbase Premium Index, measured on a 30-day moving average, has fallen to the lowest level since July 2022. The index tracks the price difference between the ETH/USD pair on Coinbase Pro, which is widely used as a proxy for US institutional trading activity, and the ETH/USDT pair on Binance, which is often seen as a proxy for global retail participation.

CryptoQuant said the highly negative numbers on a 30-day basis indicate that the selling pressure is largely coming from US entities. While global retail traders may hold positions or capitalize on the price drop, US institutions appear to be actively reducing their risks or exiting their Ethereum holdings.

The analytics platform revealed that the last time the Coinbase Premium Index reached a similar negative level was during the depths of the 2022 bear market. Based on this comparison, two possible interpretations have been developed. One is that bearish momentum could continue as US demand, which has been described as a key driver of the crypto market recovery, is currently absent, potentially limiting a near-term price recovery.

The alternative interpretation presented is that such extremely negative premiums historically align with capitulation phases, which can sometimes coincide with bottoms in the local market once aggressive selling pressure has been exhausted. CryptoQuant concluded that the $2,100 level represents a key psychological and technical zone, adding that a reversal would likely require Coinbase Premium to normalize or turn positive.

“As long as US investors sell at a discount compared to the global market, upside momentum is likely to remain limited.”

Another historic warning sign

A sharp increase in Ethereum network activity has further raised questions about potential market risks. The total number of Ethereum transfers rose to 1.17 million on January 29, one of the highest levels recorded for the metric, and represents a sudden, vertical increase in transaction activity within the network. Historical comparisons show that similar spikes have previously occurred around key turning points in ETH’s price cycle. For example, in January 2018, a similar surge in transfers coincided with the top of the market cycle, followed by a prolonged bear market.

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A similar pattern occurred on May 19, 2021, when a sharp increase in transfers was accompanied by a major market crash and a steep price correction. While high network activity is often associated with growing usage, CryptoQuant states that rapid and parabolic increases approaching price highs have historically reflected periods of market stress.

Such conditions could indicate high volatility, large-scale asset movements, or distribution by long-term holders moving funds, possibly to exchanges. Based on these historical precedents, the current spike places the crypto asset in a “risky” zone, where past patterns have been followed by notable price declines.