Ethereum Retail Traders Cash Out as Altcoin Season Index Tumbles

Ethereum (ETH) is at a tipping point as retail interest towards the largest altcoin fizzles out despite a notable uptick in whale activity. The declining interest follows a notable decline in the altcoin season index that is now sitting at range lows, suggesting that it is currently “Bitcoin season” as interest towards the largest crypto grows. Meanwhile, Ethereum price remains stuck within a narrow consolidation range, indicating that both buyers and sellers remain hesitant.

Ethereum Retail Traders Flee

Data from Santiment shows a significant decrease in retail interest towards ETH. These traders, who are popular with trading based on the market sentiment, are beginning to sell as Ethereum price stagnates within the range of $2,400 and $2,700. Moreover, some of the retail traders who bought during the May rally are beginning to realize losses.

Per this data, the traders that hold between 1,000 and 10,000 ETH have reduced their holdings from 15.12 million to 15.03 million since June 1, suggesting that they have sold 90,000 tokens in less than three weeks.

At the same time, the addresses holding between 10 and 1,000 ETH are holding the least amount of Ethereum in more than three months after an aggressive selling spree.

These sales are happening despite the recent formation of an Ethereum golden cross that is usually associated with a strong price recovery. This contrasting behaviour amid a string technical structure shows that this cohort is likely panic selling due to the fear of making losses.

The 30-day MVRV indicates that traders who bought ETH in the last month are beginning to realize losses as Ethereum price stalls. This ratio has declined to around -3%, a sign that these short-term holders are beginning to face losses.

If this decline continues, it may cause price volatility in the near term if these retail traders begin to sell. However, it could have a bullish implication on the long-term because excess losses could lead to capitulation as fewer traders become incentivised to sell.

The ongoing behaviour by retail traders is in contrast to whales, who have been gradually accumulating the token. Moreover, ETH inflows hit $583 million last week, marking the highest level of inflows in four months as institutions accumulate.

Altcoin Season Index Tumbles

The altcoin season index is declining significantly, and it is now sitting at 20, which signals that it is currently Bitcoin season as the largest crypto outperforms altcoins. When this index sits at such low levels, it also signals the rotation of capital from other crypto assets to BTC as traders seek to mitigate risks.

One of the factors that could be causing this dip is the ongoing geopolitical conflict between Israel and Iran, which caused $200M in liquidations across the crypto market. As CoinGape reported, Ethereum holders suffered the most losses.

In summary, ETH retail traders may be looking to cash out, and considering Bitcoin’s growing dominance and resilience, capital may be flowing to BTC. If losses persist and short-term holders capitulate, Ethereum price may face increased volatility in the near term.