Ethereum ether It just fell more than 20% on Tuesday in a two-day drop that almost looks like the October 10 crash.
Trading just below $4,000 early on Monday, the second-largest cryptocurrency by market capitalization fell to nearly $3,000 by Tuesday afternoon in US hours, hitting its weakest level since mid-July. That’s the second severe correction in a month, as the Oct. 10 flash crash took ETH to $3,440 from just under $4,500 a day earlier, a 25% nosedive.
ETH was recently trading just above $3,200 after a modest bounce, still down 9.4% in the last 24 hours.
The sharp drop triggered more than $970 million in liquidations in ETH leveraged derivatives markets, according to data from CoinGlass. Most of those positions were long (traders betting on higher prices) eliminated as ETH broke through support zones one after another.
Markus Thielen, founder of 10x Research, warned in a note on Tuesday that ETH’s collapse leaves little support underneath and more room to fall.
BitMine, the largest ETH treasury firm that has been steadily buying the asset over the past few months, appears to be completely exhausted with limited ability to bid for ETH, Thielen said.
BitMine accumulated nearly 3.4 million ETH, and Thielen estimated the company’s cost base at around $3,909, which would mean the company would have around $2 billion in unrealized losses.
“While there is no risk of immediate liquidation, the real concern is who will be the next incremental buyer of ETH now that BitMine appears to have exhausted its firepower,” Thielend said.
Demand for ETFs has also faded. Inflows reached $9.5 billion in July and August when BitMine ramped up purchases, but have since dried up, Thielen noted. Only $850 million has come out of ETH ETFs since the October crash, leaving room for more selling as many ETF investors are now underwater at current price levels.
Retail interest has also plummeted, Thielen said. Ethereum search trends, a rough indicator of retail demand, are down to 13% of their peak.
With all of the catalysts that fueled ETH’s rally to nearly $5,000 in August now gone, Thielen sees the $2,700-$2,800 range as the next likely landing zone.
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