Ethereum experienced a sharp pullback of nearly 5.62% from its recent local high of $2,597, as short-term holders opted to cash out amid broader market uncertainty. The drop, which occurred on May 10, has triggered speculation over whether this is just a healthy correction or the beginning of a deeper decline. However, under the surface, key metrics suggest Ethereum may be gearing up for a fresh rally.
This latest price action follows a well-known market pattern often referred to as the “sigma rule” in crypto trading—where sharp sell-offs serve as opportunities for strategic investors to buy at a discount. Ethereum’s drop into the $2,580 range appears to have activated this playbook, inviting deep-pocketed investors to accumulate while retail holders exit in fear.
Data from Glassnode reveals a sharp rise in ETH supply at the $2,580 price level, climbing from 1 million to 1.3 million ETH. This 300,000 ETH surge implies that many short-term traders sold their holdings as the price approached their breakeven levels, especially those who had bought in over the last 155 days. These exits were likely driven by the psychological pressure of reaching previous highs and a desire to lock in quick gains.
As a result of this selling wave, Ethereum saw significant long-side liquidation. Within just 24 hours, over $115.5 million in long positions were wiped out, making up nearly 68% of all crypto liquidations during that period. This kind of flush out is often viewed as a “reset” moment—clearing the slate for stronger hands to take over.
Interestingly, one of those strong hands may be Abraxas Capital. On-chain data shows the firm accumulated roughly $400 million worth of ETH over three days, translating to an estimated 155,000 ETH purchased around the $2,580 level. This move indicates a high level of confidence in Ethereum’s long-term potential, even as smaller investors were bailing out.
This activity coincides with broader macroeconomic shifts, including recent developments in the U.S.-China trade environment, which have contributed to a momentary dip in risk appetite. The total crypto market cap dipped by 1.77% to $3.71 trillion, and Bitcoin’s dominance declined by 3%, falling to 62.94%. Ethereum, being the second-largest crypto asset, naturally felt the heat, but deeper metrics paint a more bullish picture.
Despite the drop, Ethereum’s network fundamentals are improving. The number of new addresses surged by 12.26% in a single day, reaching 103,815—a strong sign of growing retail interest and user adoption. Whale activity also picked up, with six new wallets holding over 1,000 ETH each being created during the same period. These indicators often precede periods of sustained price appreciation.
If the macroeconomic backdrop remains relatively stable and the “one sigma rule” plays out as expected, Ethereum could be on the verge of reclaiming and surpassing the $2,580 resistance level. With institutional investors positioning themselves early and the network showing renewed growth in participation, ETH appears to be preparing for its next move upward.
Overall, Ethereum’s recent dip looks more like a strategic shake-out than the start of a long-term downtrend. As retail investors step back and large players step in, the stage is being set for a potential rebound. Whether ETH can fully capitalize on this setup will depend on broader market conditions, but the early signals suggest that the smart money is betting big on a bullish continuation.
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