Key Insight
- Ethereum fell 20% in February, closing sixth red month
- 2.5 million ETH moved into accumulation addresses
- $2 billion in shorts cluster above $2,200
Ether opened the week below $2,000 after a 20% February decline, extending its losing streak across recent months. The drop placed ETH into its sixth consecutive monthly close in the red, deepening pressure on sentiment. Traders now weigh rising accumulation and tightening supply against elevated leverage in derivatives markets.
Ethereum price action reflected broader fragility across altcoins, yet on-chain data pointed to steady long-term positioning. The Ethereum network recorded stronger usage metrics even as exchange liquidity shifted. That divergence kept Ethereum price at the center of short-term volatility discussions.
Accumulation Builds Despite Exchange Liquidity Drain
CryptoQuant data showed that accumulation addresses added more than 2.5 million ETH in February. Total holdings in those wallets climbed to 26.7 million from 22 million at the start of 2026. This shift occurred as price action deteriorated, suggesting strategic positioning during weakness.
ETH balance on accumulation addresses. Source: CryptoQuantThe same dataset indicated that over 30% of circulating supply remained locked in staking contracts. Staked holdings stood at 37,228,911 ETH, limiting liquid float available for immediate selling. Reduced tradable supply often compresses volatility during directional moves.
Binance 30-day netflow figures showed a $1.0 billion ETH outflow over the past month. In contrast, the exchange recorded a $1.67 billion Bitcoin inflow during the same period. That divergence suggested investors withdrew Ether for cold storage or staking while Bitcoin reserves rose on exchange balances.
Stablecoin flows also shifted materially. Roughly $6.7 billion exited Binance, with $5.3 billion in Tether and $1.4 billion in USD Coin leaving the platform. That contraction reduced immediate buying power on the exchange order books.
Network Activity Surged As Costs Collapsed
Lisk head of research Leon Waidmann noted that Ethereum (ETH) weekly transactions approached 21 million during prior peak cycles. Current network data showed weekly transfers reached 17.3 million, marking an all-time high. Median fees dropped to $0.008, reflecting a dramatic shift from 2021 levels when costs exceeded $25.
Ether total value staked. Source: CryptoQuantLower fees expanded transaction accessibility while maintaining throughput. That structure indicated higher utilization efficiency rather than speculative congestion. Strong activity during declining prices often signals user retention beyond short-term traders.
Ted Pillows observed that Ethereum closed 11 of the last 14 months in negative territory. The sixth consecutive monthly loss reinforced bearish sentiment among leveraged traders. Extended drawdowns frequently exhaust short-term positioning before trend reversals emerge.
Derivatives Positioning Points To Squeeze Risk
CoinGlass data showed open interest declined to $11.2 billion from a cycle high of $30 billion in August 2025. Despite the contraction, the estimated leverage ratio remained elevated at 0.7, only marginally below 0.77 in January. That persistence suggested concentrated risk remained within perpetual futures markets.
ETH liquidation map. Source: CoinGlassHyblock liquidation heatmaps indicated more than $2 billion in short positions stacked above $2,200. Long liquidations clustered near $1,800, totaling roughly $1 billion. A denser pocket of vulnerability appeared at $1,909, where $563 million in longs faced forced closure.
Such positioning often amplifies directional breakouts. If price accelerates upward, forced short covering can intensify upside momentum. Conversely, a breakdown toward lower liquidity zones may trigger cascading long liquidations.
On the four-hour chart, ETH formed an Adam and Eve bottom pattern. The structure began with a sharp V-shaped recovery followed by a rounded base consolidation. Technical projections placed measured resistance between $2,473 and $2,634 if buyers cleared the neckline near $2,150.
That setup aligned with tightening supply metrics on-chain. Accumulation behavior and reduced exchange balances formed the structural backdrop. Derivatives leverage introduced short-term instability around key liquidity clusters.
Ethereum price now hinges on whether buyers defend higher lows above the immediate liquidity pocket. A decisive move through $2,150 would validate the bullish reversal structure, while failure risks testing the $1,909 zone where leveraged longs remain exposed.
Source: https://www.thecoinrepublic.com/2026/02/17/ethereum-under-2k-as-2b-shorts-face-liquidation/
