The Ethereum network is weathering one of its most severe corrections in recent memory. A cascade of forced liquidations has exerted dramatic downward pressure on its price, erasing billions in market capitalization. While short-term speculators are being washed out and panic grips the market, on-chain analytics reveal a counterintuitive trend among major holders.
Institutional Developments Offer a Glimmer of Hope
Amid the price chaos, institutional groundwork continues to advance. Market observers note that BlackRock submitted an application for a staking ETF, the iShares Staked Ethereum Trust, back in December. With Paul Atkins now serving as the new SEC Chairman, analysts anticipate a more accommodating regulatory approach compared to the Gensler era, potentially improving the approval prospects for such financial products.
Technical Structure Breaks Down
Ethereum’s technical posture appears critically damaged. The price of Ether established a fresh 52-week low, trading at $2,132.71. Weekly losses now approach a staggering 30%. Market experts highlight that key momentum indicators remain deeply oversold. Furthermore, the Ethereum-to-Bitcoin (ETH/BTC) ratio has collapsed to new cycle lows, signaling that the cryptocurrency is significantly underperforming the market leader, Bitcoin.
Derivatives Carnage Triggers Billions in Liquidations
The sharp decline was ignited by a chain reaction in the derivatives market. On February 1, the world’s second-largest cryptocurrency shed approximately 17% of its value in a single 24-hour window. This plunge triggered over $2 billion in total market liquidations, with Ethereum positions accounting for roughly $900 million of that sum. The pain was concentrated among bullish traders: an estimated 80% to 85% of the forcibly closed positions were long bets anticipating higher prices.
Should investors sell immediately? Or is it worth buying Ethereum?
The severity of the move is exemplified by the reported liquidation of prominent crypto trader Garrett Jin. His leveraged long position, valued at $900 million, was completely wiped out, resulting in a realized loss of about $250 million. Such incidents underscore the thin liquidity during the overlap of Asian and U.S. trading sessions, which accelerated the selling pressure.
Major Accumulation Contrasts with Short-Term Panic
Interestingly, the massive selling on futures exchanges stands in stark contrast to the activity of long-term investors. On-chain data from Santiment indicates that so-called “whales”—addresses holding substantial balances—aggressively used the January price decline to accumulate. Throughout the month, these large investors gathered nearly 4 million additional ETH, boosting their collective holdings from around 101 million to over 105 million ETH.
The immediate outlook, however, remains precarious. With the previous support level near $2,200 now broken, market attention has shifted to the crucial zone around $2,000. A failure to hold this psychological barrier risks extending the correction further until the market fully recovers from the massive leverage unwind.
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