On-chain flows and immediate market effects
Recent on-chain data confirms a significant shift in investor behavior, as Ethereum witnessed its largest wave of long-term holder (LTH) selling since July throughout October. This movement of older, previously dormant coins to exchanges has indeed widened the immediate pool of supply, introducing new dynamics to the market’s structure and stability.
This activity from long-term holders is particularly impactful because it removes a portion of the market’s most reliable and steady backing. As these coins become available for trading, the underlying bid support weakens, making the market more sensitive to large orders and leading to thinner order books and heightened intraday volatility. For corporate desks and large traders, this environment directly translates to deeper slippage, complicating execution and cost control for substantial market orders.
The Counterbalancing Forces at Play
However, the market narrative is not one-sided. While long-term holders have been distributing their coins, other significant forces are providing a counterbalance. On-chain analytics reveal that major whales were accumulating during this same period, with one report noting purchases of approximately 170,000 ETH (worth around $660 million) in a 48-hour window in late October. This creates a push-pull dynamic where institutional demand is absorbing a portion of the selling pressure.
Furthermore, the market’s structure has evolved in ways that can mitigate the impact of such sell-offs. A substantial 29.4% of the total ETH supply is now locked in staking, creating a long-term supply constraint that underpins the ecosystem. Simultaneously, the growth of U.S. spot Ethereum ETFs has rerouted a significant amount of capital into regulated wrappers. While this has sometimes thinned liquidity on native exchanges, it also represents a deep pool of institutional capital that can provide support.
Navigating the New Market Reality
In practical terms, the market now faces a higher volatility regime where execution strategy becomes paramount. The influx of spot supply can invite arbitrage activity, potentially pressing perpetual swap funding rates into negative territory. For traders and treasury desks, adapting by splitting large orders into smaller clips spaced over time is a prudent response to avoid moving the market adversely.
The key checkpoint ahead is whether November continues October’s distribution trend. A continuation would signal a more sustained change in long-term holder sentiment, requiring fresh institutional demand just to keep prices stable. A slowdown, however, would ease the selling pressure, reduce slippage, and potentially set the stage for a more stable price recovery.
