Ethereum Whales Dump $725M as Verus Hacker Returns 4,052 ETH, Zero L2 Shuts Down

Ethereum News

Ethereum entered Friday's session under accumulating distribution pressure, with on-chain figures pointing to a sharp $725 million reduction in non-exchange whale balances over the past five sessions. Holdings tracked across the largest cohort outside centralized exchange venues fell from 125.36 million ETH on May 17 to 125.02 million ETH by May 22, a 340,000 ETH outflow timed almost precisely with the maturation of a multi-week chart structure. The rotation suggests the largest stack is unloading rather than absorbing, and the velocity of the exit has analysts flagging the move as one of the more aggressive dispositions seen during a sideways range.

Beyond the wallet flows, the broader price structure has hardened into a familiar bearish formation. Ethereum has been carving an inverted cup-and-handle since late March, a rounded distribution arc that completed near May 18 and rolled into its current handle phase around the $2,130 zone. The pattern's measured projection points to a 19% downside if the handle breaks, a move that would reset price action back to early February's range and erase several months of recovery. Each rejection from the $2,150 to $2,200 supply pocket has so far validated the topology, leaving bulls without a clean structural counter-argument and keeping the path of least resistance tilted lower into the weekend.

A split in conviction layers complicates the read. The Smart Money Index, which weighs informed-trader behavior against passive flow, remains pinned below its zero line, signaling institutional and discretionary buyers have not stepped back in despite the small rebound off recent lows. Yet long-tenure holders have added aggressively, with hodler cost-basis cohorts building positions through the dip in a pattern reminiscent of cyclical accumulation. The two readings sit in direct opposition, suggesting smart-money distribution alongside conviction-holder absorption. Whichever cohort proves correct in the coming sessions will determine if the handle resolves as a continuation lower or a structural bear-market trap.

Sentiment in the wider ecosystem caught a rare positive beat after the attacker behind the Verus-Ethereum bridge exploit returned 4,052.4 ETH worth roughly $8.5 million to the project on Thursday. The transfer represented 75% of the assets drained on May 18, when the bridge lost an estimated $11.4 million in ETH, USDC, and tBTC. The Verus team had publicly offered the attacker a settlement framework on the blockchain, agreeing to halt investigations and recognize 1,350 ETH, about $2.8 million, as a white-hat bounty in exchange for the partial return. The remaining funds were swiftly moved to a fresh wallet by the attacker shortly after the settlement window closed.

On the infrastructure front, Zero Network announced it will wind down operations after 1.5 years live, with its operator Zerion redirecting engineering resources toward its API and self-custody wallet products. The gasless Ethereum Layer 2, which launched in November 2024, was pitched as the first fully EVM-compatible rollup with abstracted fees for end users. The team conceded that operating a standalone chain was the wrong vehicle for the user-experience vision, even if the underlying thesis remained valid. Users have until the end of July to bridge NFTs, ETH, and other tokens out of the network, with deposits already suspended and a phased decommissioning timeline now in motion.

The closure adds to a rapid sequence of ecosystem retreats across the altcoin middleware stack. Cross-chain infrastructure startup Everclear announced on the same day that its core UI, protocol, foundation, and research lab would all shutter, while Ethereum infrastructure provider Syndicate Labs and the crypto card game Fantasy.top both signaled wind-downs earlier in the week. Multiple teams cited adverse market conditions as the trigger, pointing to thinning fee revenue, slow user acquisition, and the difficulty of maintaining standalone application chains during the current liquidity environment. The cluster of departures reflects a wider rationalization as venture funding and on-chain activity continue to compress.

ETH spot trade prints at $2,120.95 with a 0.61% daily decline, holding just above the first technical support at $2,104. The RSI sits at 36.81, approaching the oversold threshold but not yet washed out, while the MACD continues to register a bearish cross consistent with the broader downtrend signature. A clean reclaim of $2,132 resistance would force a retest of $2,213 and weaken the cup-and-handle thesis. Conversely, a break of $2,104 likely flushes price toward the $2,054 and $1,942 demand zones, validating the bearish projection. Spot volume of $9.22 billion remains thin, leaving directional conviction unconfirmed for now.