ETH’s upsetting post-Merge performance could have a lot do with this one factor

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Ethereum [ETH], the largest alt­coin wit­nessed a major rejec­tion near the $1,420 mark as of 22 Sep­tem­ber. ETH went down by over 20% in a week despite the Merge hype. There fur­ther remained a risk of a drop below the $1,220 sup­port. Var­i­ous nar­ra­tives such as “sell the news” began sur­fac­ing soon after the Merge went live.

Need­less to say, the token was met with mag­ni­fied sell­ing pres­sure all across cohorts, but espe­cial­ly from retail sellers.

Dark days ahead

Most of Ethereum’s sell­ing pres­sure was pro­vid­ed by retail sell­ers. Santiment’s lat­est tweet shed light on this grim sce­nario in a 22 Sep­tem­ber tweet. Here­in, ETH’s for­mer dom­i­nant buy­ers had sub­stan­tial­ly low­ered their sup­ply held since the Merge event.

Source: San­ti­ment

The Ethereum Merge (on 9/15) brought on a shift in large address behav­ior. The tweet also stated,

“In the past 6 days since the shift to proofof­s­take, address­es hold­ing 1k to 10k $ETH have dropped 2.24% of their cumu­la­tive hold­ings. 100 to 1k address­es have dropped 1.41%.”

One thing is cer­tain here. Accu­mu­la­tion ahead of the Merge was most­ly spec­u­la­tive. Fur­ther­more, investors did not aim to hold the asset after the update, as evi­dent in the graph before.

Hold­ers get­ting rid of their hold­ings, did it came as a sur­prise? Well, not real­ly. Around 50% of hold­ers suf­fered huge loss­es. The Mar­ket Val­ue Real­ized Val­ue (MVRV) ratio for Ethereum had fall­en to ‑13.6% as prof­itabil­i­ty has decreased mas­sive­ly in the past week.

Not just this, even min­ers sailed on the same band­wag­on. Over­all, Ethereum min­ers dumped up to 30K ETH hold­ings due to the price move­ment and the upgrad­ed effect.

Source: Twit­ter

Indeed a clear reflec­tion of the crum­bling state of trad­er sen­ti­ment at Ethereum right now with many look­ing to reduce their ETH exposure.

Any way out?

Of course, there’s always a way out. But what if traders/investors kept patience?

Accord­ing to data from ultrasound.money, ETH’s cir­cu­lat­ing sup­ply topped out at 120,521,139.31 ETH as the Merge shipped. Since then, it’s decreased by around 170 ETH, mean­ing ETH is cur­rent­ly deflationary.

As the sup­ply decreased, ETH (if and when) showed high demand could lead to a price hike. But again, cau­tion is to be main­tained at all times.



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