Wintermute In-Depth Analysis: ETH's Key Support at $1,600, Institutional Funds Have Not Yet Reflowed

The crypto market faced a critical liquidity test at the end of February. According to a recent market report from top global crypto market maker Wintermute, despite Bitcoin attempting to rally after liquidation events, Ethereum’s price action reveals deeper market fatigue. The report emphasizes that the key psychological and technical support level for ETH is around $1,600, while institutional systemic demand has yet to show signs of returning. As of February 24, Gate data shows that after falling below $1,900, ETH is currently hovering around $1,820, with market sentiment in extreme fear.

$1,600: ETH’s Final Defense Line

Wintermute noted in its social media analysis that ETH dropped below $1,900 this week, a level that holds more psychological than technical significance. The true critical threshold for bulls and bears is around $1,600. Derivatives market data from Gate confirms this view, showing signs of weakness.

According to Gate Research Institute, the overall market is exhibiting low liquidity and narrowing ranges. Bitcoin has repeatedly failed to break above $70,000, while ETH/BTC has slightly rebounded to around 0.0287, mainly due to Bitcoin’s significant decline rather than ETH’s strength. Derivatives data paints a more pessimistic picture: basis spreads are at multi-month lows, put option skew remains high, indicating strong hedging demand; meanwhile, open interest has been declining since October last year, reflecting waning trading activity. If ETH’s price effectively breaks below $1,600, it could trigger a new wave of chain reactions and liquidations.

Where Has Institutional Demand Gone? ETF Fund Flows Provide the Answer

Although there was a brief stabilization in prices in late February, Wintermute emphasizes that institutional demand has not returned as expected. This aligns closely with Gate Ventures’ weekly report released on February 23.

Data shows that institutional funds are accelerating their withdrawal. Last week, Bitcoin spot ETFs saw net outflows of $315.86 million, and Ethereum spot ETFs experienced net outflows of $123.37 million. This starkly contrasts with the clear institutional buying seen when the market was trading between $85,000 and $95,000 at the end of 2025.

Wintermute’s trading desk observed that current capital flows are mainly driven by selling activity. This matches analyst Axel’s view: over the past week, ETF channels saw large outflows of BTC, while exchange net inflows remained positive (tokens entering exchanges), indicating that institutions are not absorbing supply but adding to selling pressure. Without counterparties from institutions to absorb sell-offs, the market struggles to generate sustained rebound momentum.

Microstructure of the Market: Defensive Stance, Altcoins’ Brief Sparks

Against the backdrop of macro capital outflows, the market’s microstructure also appears extremely fragile. Wintermute’s report describes a market lacking conviction: volatile price movements, thin liquidity, and no clear directional bias.

Notably, a short-term positive signal emerged midweek—some high-net-worth investors showed buying interest in altcoins. In an overall defensive environment, this was a spark of confidence. However, as Wintermute pointed out, this spark “faded quickly.” By the second half of the week, the market reverted to sideways trading, and any willingness to bottom fish diminished. This indicates the market is not yet ready to reward early movers; current marginal activity is more about “protection” than “conviction,” with investors reducing positions rather than actively attacking.

For users trading on Gate, this means that chasing highs or bottom-fishing currently offers very low risk-reward. The market needs time to digest selling pressure or wait for a sufficiently attractive price (such as ETH near $1,600) to rekindle new demand.

Conclusion

The pricing power in the crypto market is undergoing a structural shift. With CME planning to launch 24/7 derivatives trading, the price discovery mechanisms for Bitcoin and Ethereum are increasingly linked to macro factors from traditional financial markets. This suggests that unless the Federal Reserve shifts monetary policy clearly or the dollar index drops significantly, crypto markets will struggle to break out independently.

Currently, gold prices are hitting monthly highs amid risk-averse sentiment, while crypto assets are declining simultaneously, indicating that markets still view them as risk assets rather than digital gold. Wintermute’s insights reveal a core contradiction: prices are falling, but not enough to attract institutional strategic positioning. For ETH, $1,600 is not only a technical level but also a crucial test for whether institutional demand will return.

In summary, the crypto market is in an awkward “no man’s land.” Both Wintermute’s observations and on-chain data from Gate point to the same conclusion: the market still needs to seek lower levels to attract liquidity and buyers. For investors, closely watching ETH’s reaction around the $1,600 support is vital. If that level holds and ETF fund flows turn positive, the market may find a breather; if it breaks down with increased volume, further downside risks should be anticipated. Until clear institutional demand re-emerges, maintaining caution and controlling positions remains the rational approach.