Ethereum ($ETH) declined nearly 4% toward $2,400 on Wednesday after the CLARITY Act failed to advance in the US Senate, triggering broad selling across the cryptocurrency market.
Expectations that the Federal Reserve will raise interest rates at its next meeting have added to the pressure.
However, declining exchange reserves, whale accumulation, and consecutive inflows into US spot Ethereum exchange-traded funds indicate that larger investors remain confident in $ETH’s longer-term outlook.
Ethereum exchange reserves drop by 159,000 $ETH
Ethereum withdrawals have exceeded deposits across cryptocurrency exchanges for five consecutive days, according to CryptoQuant data.
The trend reduced exchange reserves by approximately 159,000 $ETH during the period.
Declining reserves typically suggest investors are transferring coins into private wallets rather than preparing to sell them.
Moving tokens away from exchanges also reduces the immediately available supply. If demand remains steady or increases, this contraction in liquid supply could eventually support Ethereum’s price.
Wallets holding between 10,000 and 100,000 $ETH added approximately 200,000 $ETH to their collective balances over the past week.
These addresses are commonly associated with whales and other large investors, suggesting the recent decline has attracted buying from major market participants.
Smaller holders moved in the opposite direction. Wallets containing between 100 and 10,000 $ETH distributed approximately 192,000 $ETH over the same period.
The selling extends a retail distribution trend that has remained in place since the beginning of the year. This divergence indicates that larger investors are absorbing supply released by smaller holders.
Institutional demand has also declined over the past 24 hours. US spot Ethereum ETFs recorded $142.30 million in net outflows on Tuesday, imitating the pullback of the broader crypto market.
The outflows suggest institutional investors are now decreasing their $ETH exposure amid regulatory uncertainty and tighter monetary conditions.
Markets assigned a 92.3% probability to a 25-basis-point Federal Reserve rate increase at Wednesday’s meeting, according to the CME FedWatch tool.
The CLARITY Act failed to secure the 60 Senate votes required to invoke cloture and advance the legislation.
The setback triggered immediate selling across the crypto market, pushing Ethereum approximately 5% lower.
Coinglass data shows that $ETH recorded around $211 million in liquidations over 24 hours. Bullish traders suffered most of the losses, with long liquidations accounting for approximately $184 million.
$ETH risks decline toward the $2,270 support
Ethereum has fallen below its initial support levels at $2,431 and the 20-day exponential moving average near $2,435.
However, $ETH remains above its 50-day, 100-day, and 200-day EMAs, which are clustered between approximately $2,153 and $2,270.
Holding this area preserves the broader constructive trend despite the short-term decline.
The 14-day Relative Strength Index is near 50, indicating neutral momentum, while the Stochastic oscillator has entered oversold territory.
If $ETH cannot reclaim $2,431, the 50-day EMA at $2,270 and 200-day EMA at $2,266 represent the next major support area. Additional downside levels sit at $2,172, $2,153, $1,961, and $1,809.
On the upside, Ethereum faces resistance at $2,544, followed by $2,626 and $2,786.
