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Ethereum’s largest wallet cohorts have moved into unrealized losses in early 2026 as ETH trades near US$1,800-$2,000, while Vitalik Buterin proposes a core network redesign to address structural limits.
Data from CryptoQuant shows the ETH Whales Unrealized Profit Ratio bands compressing toward and below zero across all major wallet tiers. This pattern last appeared at scale during the 2022 bear market.
The chart segments whale wallets into three groups by balance size. It measures how much of each group’s holdings sit in unrealized profit relative to the price at which those coins last moved.
CryptoQuant divides large Ethereum holders into three tiers. Wallets with 100,000 ETH or more appear in pink. Wallets holding 10,000 to 100,000 ETH show in light blue. Wallets with 1,000 to 10,000 ETH appear in purple.
Each colored band tracks the share of coins in unrealized profit. When bands sit above zero, most holdings remain in the profit zone. When they fall toward or below zero, more coins trade at a price below their cost basis.
As of early 2026, all three cohorts have been hovering near or below the zero line. The pink band for the largest holders has contracted sharply. The mid-tier blue and purple bands have followed the same direction. On the chart’s right axis, ETH trades between $1,800 and $2,000. That level stands far below the peaks near $4,000 seen in 2021 and again in 2024.
The last time whale unrealized losses reached similar levels was in 2022. ETH fell from above $4,000 to under $1,000 after the Luna collapse and the FTX implosion. Bands remained near or below zero for an extended stretch before price recovery lifted them again.
A similar compression and rebound appeared between 2018 and 2019. In both earlier cycles, whale losses preceded eventual price recovery, although timelines differed.
The 2022 downturn followed severe market shocks. Luna’s collapse triggered cascading liquidations. FTX’s failure further deepened losses across digital assets. During that phase, unrealized whale profit ratios stayed depressed for months. Over time, as ETH climbed above the aggregate cost basis of large holders, the bands expanded upward again.
Earlier, the 2018-2019 period showed a related structure. Whale cohorts moved into unrealized losses, then gradually returned to profit as price stabilized and advanced.
Now, with bands again near zero, market observers compare the setup to those of prior cycles. Yet, the duration and path remain uncertain. Will history repeat itself for Ethereum whales?
While whale metrics deteriorate, Ethereum’s architect calls for structural change. Vitalik Buterin argues that incremental upgrades cannot sustain long-term scaling demands.
Developers continue pushing toward rollups and advanced zero-knowledge proving systems. Still, the underlying architecture struggles to match the pace. That mismatch creates friction and raises complexities in verification.
At the center of the debate stands the Ethereum State Tree. This structure manages accounts, balances, and the storage of smart contracts. It relies on Merkle Patricia trees, which feature intricate branch logic and hashing rules.
As zero-knowledge rollups expand, proving costs increase sharply. Provers must process complex branch paths and large data structures. That workload consumes hardware resources and time.
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Buterin proposes replacing the current model with Binary State Trees. These trees use simple two-child nodes instead of multi-branch structures. As a result, proof generation becomes more straightforward.
In addition, he suggests introducing a RISC-V virtual machine to reduce complexity and eliminate EVM-proving bottlenecks. Binary state trees align more closely with modern zero-knowledge systems. Provers would manage simpler paths and fewer edge cases.
This proposal targets structural inefficiencies rather than surface adjustments. If implemented, proof sizes could shrink, and processing could become more predictable as Ethereum evolves under the rising demands for scalability.
Ethereum whales have moved into unrealized losses as ETH trades far below prior cycle peaks. At the same time, Vitalik Buterin has proposed Binary State Trees and a RISC V VM to reduce Ethereum’s structural complexity. The key takeaway is that Ethereum now faces both market pressure and a major technical turning point.
