Ethereum fell below the $3,900 mark, hitting a nearly seven-week low, continuing the significant retracement of cryptocurrencies this week, with the entire cryptocurrency market losing over $140 billion in market value.

On September 25, Ethereum, the world's second-largest cryptocurrency, once plunged more than 7%, reaching a low of $3,823, then slightly rebounded, but still registered a daily decline of 6.55%.

According to Coinglass, nearly 250,000 people worldwide faced liquidation in the past 24 hours, with a total liquidation amount exceeding $1.1 billion.

The liquidation heatmap shows Bitcoin and Solana taking the second and third spots in liquidation scale, after Ethereum. By the end of trading on Thursday in New York, Bitcoin dropped 3.62%, falling below the critical support level of $110,000, while Solana fell 7.2%, marking a six-day losing streak.

The cooling of institutional fund inflows exacerbated the selling pressure. Since Monday, investors have withdrawn nearly $300 million from Ethereum ETFs listed in the United States. On Monday alone, a sudden market drop led to long positions worth $1.7 billion being forcibly liquidated, affecting almost all mainstream cryptocurrencies.

According to Rachel Lucas, a cryptocurrency analyst at BTC Markets, Ethereum's pullback stems from "cooling institutional fund inflows" and "technical indicators showing short-term pressure." Lucas warns that if Ethereum falls below $3,800, it could trigger more liquidations.

Despite the Ethereum supply on exchanges dropping to a nine-year low, suggesting that long-term holders are accumulating coins, the selling behavior of long-term holders offsets the positive impact of new fund inflows, trapping Ethereum in a tug-of-war between bulls and bears.

Long-Term Holders' Selling Offsets Positive Signals

Despite the continued drop in Ethereum's exchange supply to a nine-year low, indicating that investors are withdrawing tokens from centralized platforms for long-term holding, the market still faces selling pressure from long-term holders.

Over the past month, investors have cumulatively purchased over 2.7 million Ethereum, valued at over $11.3 billion, demonstrating strong confidence in Ethereum's long-term potential.

However, Ethereum's activity indicator has been on the rise, which measures the behavior of long-term holders, indicating that these investors are selling rather than hoarding.

Analysts point out that the selling actions of long-term holders offset the bullish pressure from new fund inflows, leaving Ethereum stuck in a stalemate between two opposing market forces.

If long-term holders continue to sell in large quantities, Ethereum prices could drop further, completely shattering the current bullish expectations.