The sell-off may be driven by stop-loss, cash flow pressure, or strategic adjustments. With Ethereum’s weak fundamentals, stagnation in active address growth, Layer 2 value diversion, and institutional bearish sentiment, the confidence of large holders has been shaken.

On April 9, 2025, a wallet suspected to be linked to World Liberty Financial (WLFI) sold 5,471 ETH at an average price of $1,465, cashing out around $8.01 million. This is no small move—this wallet had previously spent $210 million to acquire 67,498 ETH at an average price of $3,259, now facing a paper loss of $125 million. As a DeFi star project backed by the Trump family, WLFI’s actions are perplexing: Why liquidate at this critical moment? How much more ETH do they have left to sell? Will they continue to dump in the future?

Tough Decisions in the Market’s Cold Winds

Currently, the crypto market seems to be enveloped in cold air, with ETH’s price shivering between $1,465 and $1,503, more than halving from WLFI’s entry price. Looking back to early 2025, the optimism sparked by Trump’s inauguration led WLFI to heavily increase its ETH holdings, seemingly riding the wave of favorable policies. Unfortunately, the good times didn’t last, and ETH’s continued slump turned that optimism into a massive paper loss of $125 million. From $89 million in March to $125 million now, the losses continue to snowball.

The timing of the sell-off is intriguing. On the same day, a giant whale bought 4,677 ETH at $1,481, with the market fiercely battling between bulls and bears. WLFI chose to sell at this moment, possibly sensing a short-term bottom or fearing further price declines. Regardless, this $8.01 million cash-out is like selling an old coat in the dead of winter—reluctant, but necessary.

Why Sell: Stop-Loss or Something Else?

Why did WLFI sell at this point? The answer may not be just one.

First, the logic behind stop-loss is clear. With ETH dropping by $1,794 per coin, selling 5,471 ETH may have resulted in nearly $10 million in losses, but it’s still better than watching the remaining 62,027 coins continue to devalue. It’s like cutting off a “deadstock” in the stock market—preserve cash first. After all, if the entire position were liquidated at the current price, the loss would be close to $111 million. Who can bear that?

Second, cash flow pressure cannot be ignored. WLFI once basked in the glory of $590 million in token sales, but operational, partnership, and new project expenses haven’t stopped. While $8.01 million may not be a lot, it can ease urgent financial needs during a market slump. After all, a project backed by the Trump family can’t afford to see its wallet empty, can it?

Additionally, this might be a strategic pivot. WLFI’s asset pool includes not only ETH but also “veterans” like WBTC, TRX, and “newcomers” in the RWA space. Reducing ETH holdings could free up funds to invest in partners like Ondo Finance or bet on Layer 2’s potential. After all, the DeFi stage is vast, and ETH is only one player.

Lastly, don’t forget the external scrutiny. As a “child” of the Trump family, WLFI has the spotlight, but it also carries controversy. With 75% of the profits allocated to the family in its whitepaper and the risk passed onto token holders, this model has long been questioned. Could this sell-off be to prove to investors that WLFI isn’t just riding on the “celebrity effect”? While unlikely, it’s not entirely out of the question.

In conclusion, stop-loss and liquidity pressures are the most direct driving forces, while strategic adjustments may be a potential underlying motive. As for external pressure, it may just be the background noise in this drama.

How Much More Can Be Sold: The Last Card and the Bottom Line

After selling 5,471 ETH, WLFI still holds 62,027 ETH, worth about $90.9 million at the current price. How much more of this last card can they play?

From a funding perspective, if each sale targets around $8 million in cash flow, selling another 5,000 ETH would suffice, leaving about $56 million as a “safety line.” However, if there are larger funding gaps, such as new project launches or debt maturities, selling 10,000 to 20,000 ETH could be possible. But in that case, ETH’s core position would have to be questioned.

The market’s ability to absorb this is also crucial. This $8.01 million sell-off didn’t stir up much of a wave, with ETH’s daily trading volume of $5 billion seemingly able to digest it. However, if WLFI were to dump tens of millions of dollars’ worth of ETH in one go, panic could exacerbate the price decline. To play it safe, a gradual, small-scale sell-off seems to be their style.

More importantly, the strategic bottom line. WLFI views ETH as a “strategic reserve.” If its holdings fall below half (around 33.74 million ETH), its position as a DeFi leader could be shaken. Unless absolutely necessary, they probably wouldn’t deplete this card easily. In the short term, selling another 5,000 to 10,000 ETH (around $7.3 million to $14.65 million) seems like a reasonable guess—enough to quench immediate needs without causing significant damage.

Will They Keep Selling?

Will WLFI continue to reduce its holdings in the future? The answer lies in three key clues.

First, watching the market’s moves. If ETH drops below $1,400 and the paper loss increases by another $10 to $20 million, the urge to sell might become irresistible. However, if the price rebounds to $1,800 and the loss shrinks to $90 million, they might tighten their grip and even consider buying back some confidence. At present, the support level of $1,450 and the resistance level of $1,600 serve as key indicators.

Second, internal calculations are also crucial. If WLFI still wants to play a leading role in DeFi, they cannot afford to sell off too much ETH. The pace of the sell-off might slow down. But if they’re eyeing new opportunities, such as RWA or emerging tokens, ETH could turn into a “cash machine,” accelerating their reduction of holdings.

Third, external factors are important. Trump’s pro-crypto policies have acted as a shield for WLFI. If major moves happen in Q2 and the market recovers, they may sit back and relax. However, if the family becomes embroiled in political controversies or investors push for more transparency, the pressure to liquidate will inevitably rise.

In the short term (one to two months), small-scale sell-offs are likely, totaling between $10 million to $20 million. If the market remains sluggish, medium-term reductions could account for 30% to 50% of their remaining holdings, roughly $27 million to $45 million. In the long run, unless ETH fully rebounds, WLFI may gradually withdraw from this territory and move its chips to new battlegrounds.

Ethereum’s Fundamental Shifts: Why Are Whales Turning Pessimistic?

Ethereum’s fundamentals seem to be undergoing a quiet transformation in recent years, and this could be a key reason why large holders are becoming pessimistic about ETH’s future. According to Glassnode data, the number of active Ethereum addresses has nearly stagnated over the past four years, remaining at the same level without significant growth despite market booms. This is not the “efficiency zone” resulting from technical optimization, but more likely a sign of exhausted growth momentum, revealing Ethereum’s fatigue in attracting new users and developers.

At the same time, the rise of Layer 2 (L2) solutions was expected to inject new vitality into Ethereum but has unexpectedly weakened its value-capturing ability. L2 solutions significantly reduce the Gas fees on the mainnet by offloading transaction volume (in March 2025, Gas fees dropped by over 70%), which is user-friendly but also means that the value originally returned to ETH holders via the EIP-1559 burning mechanism is being intercepted by L2, further compressing Ethereum’s “profit margins.” Analysts point out that unless the mainnet can revive demand for block space through large-scale tokenization or other methods, Ethereum’s long-term competitiveness could be at risk.

Institutional perspectives also reflect these concerns. CoinShares pointed out in a report that frequent adjustments to Ethereum’s protocol economics (such as the Dencun hard fork) have created uncertainty, hindering institutional investors from building reliable valuation models and weakening its appeal. In March 2025, Standard Chartered lowered its price target for Ethereum in 2025 to $4,000, citing structural decline.

Jon Charbonneau, co-founder of crypto investment firm DBA, also mentioned that Ethereum’s issuance model under the proof-of-stake (PoS) mechanism presents fundamental trade-offs, and adjustments are unlikely to resolve the core contradictions. On X platform, some users even commented that Ethereum “has hardly changed since 2016,” with slow upgrades and missed opportunities for rapid transformation, almost becoming a “victim” of its own success.

At the same time, the EigenLayer staking airdrop (Stakedrop) event disappointed the market, as the narrative meant to boost ETH holders’ returns through restaking (再质押) collapsed due to unfair distribution, further damaging whale confidence. These signals collectively point to a reality: Ethereum’s fundamentals are being eroded by both internal and external factors. The growth engine that once powered it has shown signs of exhaustion, and the pessimistic sentiment from large holders may be a direct reflection of this trend.

Summary

This sell-off event not only exposes WLFI’s struggles in the market’s cold wave but also reflects deeper challenges facing Ethereum. The stagnation in active address growth, the value siphoning by L2 solutions, and the signals of institutional pessimism have cast a shadow over Ethereum’s fundamentals, shaking the confidence of large holders. WLFI’s next steps, whether continuing to sell or shifting strategy, will unfold in the dual battleground of market forces and policy.

For investors, while chasing the allure of a popular project is tempting, it’s crucial to remain calm and assess: Can Ethereum reignite its potential? What lies ahead for WLFI’s bold bet? The answer may only be revealed by time.

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