Ethereum’s ether just tumbled more than 20% by Tuesday in a two-day rout that almost resembled the October 10 crash.
Trading just below $4,000 early Monday, the second-largest cryptocurrency by market cap plummeted to nearly $3,000 by Tuesday afternoon U.S. hours, touching its weakest level since mid-July. This marked the second severe correction in a month, following the October 10 flash crash, which saw ETH drop from $3,440 to just shy of $4,500, resulting in a 25% nosedive.
ETH was recently trading just above $3,200 after a modest bounce, still down 9.4% over the past 24 hours.
The sharp decline triggered over $970 million in liquidations across leveraged ETH derivatives markets, leading to significant losses for traders who had taken long positions, betting on higher prices, as ETH sliced through various support zones.
Markus Thielen, founder of 10x Research, cautioned that ETH’s breakdown leaves minimal support beneath and indicates more room for further declines.
BitMine, the largest ETH treasury firm that has consistently purchased the asset over the past months, seems to be fully tapped out, limiting its ability to acquire more ETH, according to Thielen.
BitMine accumulated nearly 3.4 million ETH, with Thielen estimating the firm’s cost-basis at around $3,909, suggesting the firm is facing approximately $2 billion in unrealized losses.
“While there’s no immediate liquidation risk, the real concern is who will be the next incremental buyer of ETH now that BitMine appears to have exhausted its firepower,” Thielen stated.
Demand for ETFs has also diminished. Inflows hit $9.5 billion in July and August as BitMine escalated its purchases, but have since dried up, Thielen noted. Only $850 million has exited ETH ETFs since the October crash, leaving potential for more selling as many ETF investors are now underwater at current price levels.
Retail interest has plummeted as well, Thielen reported. Google search trends, serving as a rough proxy for retail demand, for Ethereum have fallen to 13% of their peak.
With all the catalysts that drove ETH’s rally to nearly $5,000 in August now vanished, Thielen anticipates the $2,700-$2,800 range as the next probable landing zone.
Read more: Bitcoin Plunges Below $100K for First Time Since June as Crypto Correction Worsens
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