On the 30th of January, Vitalik Berin posted on X that the Ethereum Foundation was entering a period of what he called quote mild austerity. He framed this as a strategic pivot to deliver on an aggressive roadmap while ensuring the foundation's long-term sustainability. And then he announced something that on the face of it seemed like a confident long-term commitment.
He said he had personally withdrawn 16,384 ETH, worth roughly $43 million at the time, to fund a suite of open-source software and hardware projects spanning everything from privacy tools and encrypted communications to biotech and secure operating systems. The funds, he said, would be deployed towards these goals, quote, over the next few years. He even mentioned he was exploring decentralized staking to generate additional runway on top of it.
Now, the market reacted exactly as you would expect. ETH dipped about 7% on the day, but the long-term framing reassured most investors. Austerity, yes, but a considered strategic multi-year austerity.
The Ethereum Foundation was tightening its belt, not running for the exit. Analysts praised the transparency, while community members called it mature stewardship. And that right there is where the onchain data starts to tell a very different story because 4 days after that announcement, the selling began.
Starting on the 2nd of February, onchain trackers including Look onchain and Arkham Intelligence began flagging significant ETH movements from wallets attributed to Vitalik. Between the 2nd and the 5th of February alone, approximately 6,183 ETH were sold at an average price of around $2,140. That is roughly 13.
24 million in under 4 days. ETH, which had been trading near $2,360 at the start of that window, fell to $1,825 by the end of it, a 22. 7% decline.
Then came a roughly two-week pause before it started again. On the 22nd of February, Vitalik withdrew 3 and a half thousand ETH from the Ave lending protocol and began swapping portions of it into stable coins on cow protocol. Over the following 2 days, another 1,869 ETH was sold worth approximately $3.
67 million. ETH fell 5. 7% in those 48 hours alone.
And by the 24th of February, the running total had climbed to somewhere between 10,700 and 10,800 ETH sold this month, valued at approximately $21. 74 million. Now, I know what you're probably thinking.
He said a few years. He sold nearly half the allocation in 3 weeks. Those two things are not easily reconcilable.
But here is where I need to give you the full picture because intellectual honesty matters more than a clean narrative. The sales were not secret. The 30th of January withdrawal was a public announcement on X cited by CoinDesk the block and Decrypt within hours and the sales are not going to a centralized exchange to be cashed out.
They're instead rooted through cow protocol, a decentralized exchange aggregator that uses batch auctions specifically designed to minimize price impact and protect against the kinds of front running bots that can turn a large sale into a market moving event. And Vitalik's remaining holdings around 224,000 ETH worth approximately $416 million. So the total amount sold this month represents less than 4% of his stack.
So why does this matter at all if the sales were pre-announced and the scale is relatively small? Well, because optics are a force multiplier in financial markets and the timing here not great. >> The crypto fear and greed index hit an all-time low of five on the 6th of February.
as in five out of 100. And to put that into context, the index bottomed at six during the FTX collapse. So sentiment is now worse than it was in the wake of one of crypto's biggest ever catastrophes.
ETH has fallen 45. 7% from its 14th of January price of $3,354. 82 to the 5th of February trough of $1,823.
And in that same period, ETH underperformed BTC by nearly 11 percentage points. BTC fell roughly 35% from peak to trough. ETH fell 45.
7%. That gap does not close on its own. It requires an explanation, and the explanation is partly structural, but the founder selling into maximum fear is the match thrown onto an already fuel soaked floor.
Okay, now let's talk about what that selling actually triggered because the direct impact of Vitalik's transactions is only one piece of a much larger demolition job. On the 1st of February 2026, over $2. 5 billion in crypto positions were liquidated in 24 hours.
Ethereum led the carnage with $1. 15 billion in positions wiped out as it fell as much as 17% in a single day. 434,000 traders were liquidated in that window.
Of the total, roughly 93% were long positions. Now, these were the retail investors who'd been accumulating through the late 2025 rally, using leverage to amplify their exposure and who got absolutely hammered when the floor gave way. Then on the 5th of February, a second wave hit over $1.
45 billion in additional liquidations across the market with ETH long positions again accounting for the lion share. Now, to understand why these cascades happen, you need to understand the doom loop that lives inside the derivatives market. Here's how it works.
At 50 times leverage, a 2% price drop hits margin requirements and forces exchanges to automatically close positions. Those force closures dumps supply onto the market, which pushes the price down further. That lower price then triggers the next layer of leverage longs, which creates more force selling.
Market makers trying to hedge their exposure start pulling liquidity. Retail sees the red and joins in. And spot price craters even though the original selling was relatively small.
It's a self-reinforcing machine and it runs fastest when the initial sentiment shock is something emotional like for instance a founder selling. Now, even though Vitalik's $21 million represents roughly 0. 1% of Ethereum's daily trading volume, the psychological signal it sends to a market already drowning in extreme fear is worth multiples of that in panic selling.
And speaking of tracking these moves before they become headlines, this is exactly why you need the Coin Bureau Telegram channel in your life. It's where we share the latest breaking news, provide deep dive alpha, and give you the most important market updates, all pinged directly to your device so you don't miss a thing. Whether it's whale wallet movements, ETF flow data, or onchain signals flashing red before the broader market reacts, our members see it first.
So, sign up today using the link down below or by scanning the QR code on screen. Now, here is where the story gets genuinely complicated. Because the very same day that Vitalik was continuing his selling on the 24th of February, the Ethereum Foundation announced something that the founder is dumping narrative conveniently ignores.
The foundation revealed it is staking approximately 70,000 ETH with all staking rewards directed back into the treasury to fund protocol research, ecosystem development, and community grants. At the current staking yield of around 2. 8%, that's roughly 1,966 ETH per year flowing back into operations.
And crucially, staking is not selling. The principle stays locked and the supply is removed from circulation. The opposite of dumping.
In other words, it signals long-term conviction in the network's proofofstake security model. So let's be precise about what is actually happening here because conflating the two is how you get bad analysis. Vitaliputerin is selling from his own personal wallet through a philanthropic vehicle called Kenro to fund projects he publicly committed to on the 30th of January.
The Ethereum Foundation's treasury meanwhile which holds approximately 172,650 deployable ETH is not being sold. It is being staked. Now these are two separate actors, two separate pools of capital and two fundamentally different intentions.
The legitimate critique is not that Vitalik is betraying the network but that selling half your allocation in 3 weeks when you said a few years is a concerning gap between communication and action. And when the market is in extreme fear, that gap has consequences that go far beyond the dollar value of the ETH sold. But here's the harder question that the Vitalik story is actually masking.
Because even if every single ETH sale stop tomorrow, Ethereum has a structural problem that no staking announcement can paper over. Cast your mind back to March 2024 when the Denkun upgrade launched EIP4844. This introduced dedicated blob space for layer 2 networks to post their transaction data to the Ethereum mainet at dramatically reduced cost.
The stated goal was to scale Ethereum by making rollups cheap and it worked. Layer 2 usage exploded. But something else happened at the same time that nothing in the marketing materials mentioned prominently.
The fees that layer 2 networks had been paying to the Ethereum base layer absolutely collapsed. In 2024, L2 Networks paid approximately $130 million to Ethereum in security fees, representing about 41% of their total revenue. In 2025, that number fell to $10 million.
Less than 10% of their revenue is now going back to the base layer. The remaining $119 million was retained as profit by the layer 2 operators. base.
Coinbase's layer 2 generated over $75 million in revenue last year. Ethereum mainet meanwhile generated $39 million. So to put it plainly, Ethereum built the highway, paid for the tarmac, and then watched the toll booths get installed by someone else.
Meanwhile, average gas fees on mainet are now around 0. 5 gay. A year ago, they were 7.
14 gay. That is a 93% collapse in the cost to use the base layer. And if you're wondering why the ultrasound money thesis has gone quiet, well, this is exactly why.
ETH is supposed to become deflationary through EIP1559, burning coins with every transaction. But when fees are near zero, burns are near zero, and with issuance continuing, Ethereum is now mildly inflationary. The supply narrative that underpinned a significant chunk of the bullcase is currently broken.
The Faka upgrade introduced a burn flaw for blob fees in December that has partially addressed this, but the ultrasound money story is not fully restored. And you can see all of this reflected in the ETH BTC ratio. This is the most brutal single chart in the Ethereum story right now.
The ratio currently sits at approximately 0. 02. 0287.
The 10-year average is 0. 044. The ETH BTC ratio has now been below 0.
05 for 14 consecutive months. The only comparable streak in Ethereum's history was the 33-month period from August 2018 to April 2021. In other words, we're approaching the duration of a full crypto bare market in terms of ETH's relative underperformance versus Bitcoin.
Now, this matters enormously to the institutional story, which is the final piece of this picture. Because while Vitalik is selling from a personal wallet and L2s are quietly cannibalizing mainet revenue, the institutions are watching all of this with billions of client money on the line. Black Rockck's ETHA, the largest spot Ethereum ETF, has seen negative one-month net flows of $819.
96 million. Its year-to-ate return as of the 24th of February stands at 333. 7%.
And here's the number that should make every ETF holder uncomfortable. The average acquisition cost across all holders of spot Ethereum ETFs is approximately $3,500 per ETH. So, with ETH currently trading below $1,900, the average ETF investor is sitting on unrealized losses of over 45%.
Across all five ETH ETFs, that's approximately $5. 15 billion in paper losses. Bit mine, which made a celebrated pivot to an Ethereum treasury strategy, is reportedly sitting on a paper loss of roughly $8.
8 billion. And this is where the exit liquidity question becomes genuinely uncomfortable because the pattern we're watching plays out in crypto with grim regularity. Insiders accumulate early at prices retail never sees.
Tokens go public or reach all-time highs. Retail floods in at the top using leverage. Insiders begin to gradually exit.
Prices fall. Retail gets liquidated. Insiders are out.
Now, to be absolutely clear, that is not what Vitalic Buteran is doing. His proceeds are publicly committed to open-source software, privacy, infrastructure, and biotech. This is not a rugpool and not personal enrichment.
He still holds 224,000 ETH, after all. But the optics of a founder selling into a market where retail is underwater, the fear and greed index is at 8 and cascading liquidations have wiped billions from leverage positions. Not great.
And there's one more element to this equation that deserves mention because it arrived on exactly the same day as this story reached its latest chapter. On the 24th of February, a separate whale wallet with the identifier 0x EADC offloaded 16,924 ETH worth $31. 97 million within 30 minutes at $1,889 per ETH.
$32 million of Ethereum sold in half an hour. That single transaction dwarfs anything Vitalik moved on a given day. But this is the environment ETH is trading in right now.
Multiple large holders distributing simultaneously into thin liquidity while leveraged retail absorbs the impact. >> What's the verdict? >> Well, let's be blunt about all of it.
First off, the Vitalic secret dumping framing is wrong. The sales were publicly announced and the mechanism designed to minimize market impact. His remaining holdings are enormous.
But the tension between a few years and 3 weeks is real. The structural challenge from L2 fee cannibalization is real. The ETH BTC ratio at multi-year lows is real.
The $5 billion in ETF unrealized losses is real. And the psychological damage of watching any founder sell into maximum fear, regardless of stated purpose, is absolutely real. Now, what gives Ethereum its long-term case is still there.
The Glamsterdam upgrade targeting Q2 or Q3 2026 aims to increase the block gas limit towards 200 million, introduce parallel processing, and drive meaningful L1 activity back to the base layer. Black Rockck has filed for a staking enabled ETH ETF that would generate yield for institutional holders. Standard Charter's year-end target remains $75,000.
The foundation staking 70,000 ETH is a genuine long-term conviction signal, but conviction signals don't pay margin calls. And right now, the retail investors holding leverage long positions have already discovered that the hard way. So the question now isn't whether Ethereum survives.
The network is as technically robust as it has ever been. No, the question now is whether the people who believed the few years language and bought Ethon leverage have any capital left to participate in the recovery when it eventually comes. But what do you think?
Is Vitalik justified in selling at this pace to fund his development commitments or does the few years framing demand a much slower timeline? Let me know in the comments down below. If you want to understand what the institutional ETF flows are actually signaling for Ethereum's recovery timeline, then check out our video on that right over here.
And if you want to see how Ethereum's layer 2 competition is reshaping which chains actually win in 2026, well, that video is right over here. Okay, thank you all for watching and I'll see you again soon. This is Guy signing off.
