Under the dual pressure of escalating tariff wars and increasing risks of economic recession, the crypto market has entered a new round of panic selling, and the staking risks on the ETH chain have once again become a hot topic in the market. Due to the potential liquidation scale of up to 320,000 ETH in the price range of 1760-1660, arbitrage shorts have begun to frequently target the whales in this area, attempting to activate the on-chain liquidation mechanism. Interestingly, whenever the price of the coin drops to the liquidation price, two whales with staking scales of 64,800 ETH and 60,800 ETH always manage to add margin at key moments, alleviating the liquidity crisis. This high-intensity tug-of-war has also led to significant fluctuations in the long and short ETH prices around 1760.
Since March 24, despite the continued drop in ETH prices, the open interest in bearish options across the network has increased by 23% against the trend. The core logic for the shorts not choosing to take profits and instead continuing to add positions lies in the historical path from the last bear market, where ETH fell from $4860 to $882 (a decline of about 80%). If calculated on the same basis, the theoretical bottom of this bear market would point to the $820 level. This means that the current price correction has only completed 60% of the theoretical decline, and most trend shorts determine that the market is still in the mid-stage of a bear market.
So, will ETH really drop to $820? The author believes it is unlikely for the following two reasons:
1. According to data from IntoTheBlock and Glassnode, although Ethereum fell 78% from its high on June 13, 2022, at that time, more than half of the addresses were still in profit, with long-term holders (investors holding for more than a year) having a profit share of as high as 64%. Despite the ETH price on March 11, 2025, being 103% higher than on June 13, 2022, the percentage of profitable Ethereum addresses at that time was only 47%, and the profit share of long-term holders was just 34%. This abnormal divergence indicates that after a full turnover in the 2020-2024 period, the average holding cost of the ETH market has significantly risen to $2058 (Glassnode, March 2025), and the majority of investors are currently in a state of unrealized losses, with the reluctance to sell reinforcing a diminishing selling pressure.
2. The Federal Reserve implemented unconventional monetary tightening policies from 2022 to 2023, rapidly raising the benchmark interest rate from 0% to 5.25% within just 12 months, triggering a severe contraction in global liquidity and causing a rapid collapse of the crypto market. However, the trend of marginal improvement in liquidity by 2025 is gradually becoming clear: on one hand, the Federal Reserve has begun planning to reduce the scale of quantitative tightening (to be implemented as early as April); on the other hand, CME interest rate futures indicate that the market generally expects 2-3 rate cuts to be initiated in 2025, and the decline in real interest rates is expected to drive the recovery of risk asset valuations.
Of course, limited downside does not mean the market will rebound immediately. This round of ETH's decline has nearly destroyed the living strength of on-site bulls. According to on-chain analyst Murphy's data, the two large-scale buy-ins for ETH were concentrated in the $3200-$3500 and $2600-$2800 ranges. When the price drops below $2300, the ability of the bulls to add positions noticeably weakened, and some addresses have even begun to cut losses; when the price drops below $2000, these addresses have almost made no further attempts to add positions.
Undoubtedly, the sluggish on-chain activity is highly consistent with the difficulties faced in the secondary market. On February 3, ETH quickly dropped from 3082 to 2090, with a staggering daily decline of 32%, causing approximately $6.8 billion of ETH leverage to be liquidated (5 billion in contracts + 1.8 billion on-chain), which is almost the worst bull disaster in crypto history. In a sense, ETH has entered a new accumulation phase, where new funds entering the market will not immediately rescue the heavy historical trapped positions, but will continue to wash out the bottom and absorb cheap chips. For traders, the current operational strategy should be to gradually build positions on dips and appropriately increase the frequency of swing trading.
On April 1, Binance's unexpected adjustments to the position limits and margin ratios for multiple altcoins triggered a crisis in the MEME coin market: tokens like ACT, TST, HIPPO, DEXE, and PNUT experienced a collective flash crash after the new regulations took effect. Although the market generally blames the platform's hasty response mechanism and forced liquidation operations, the liquidity dilemma of MEME coins is essentially a structural contradiction in the industry. According to Coinmarketcap data, among the 16,200 crypto tokens currently recorded, 99.8% have an average daily trading volume of less than $50 million. Meanwhile, Coinbase CEO Brian Armstrong revealed that more than 1 million new tokens are still flooding into the market each week. The combination of shrinking liquidity and bulk supply is accelerating the value reassessment process of the altcoin sector. For example, the FDV of VC coins launched on Binance in March generally dropped to $300 million to $500 million, while during the same period, the valuations of MEME coins mostly remained at levels of $20 million to $30 million, representing a decline of 60%-70% compared to 2024.
From past experience, when the entry threshold gradually dissolves (anyone can issue coins without barriers) and the supply of underlying assets continues to expand, a dual pressure emerges, leading to a capital concentration effect—high-quality projects not only harvest market liquidity but also form structural valuation premiums. Although the initial phase of valuation adjustments triggered by cyclical fluctuations in the industry indiscriminately squeezes bubbles, the determinative premium of leading projects will gradually become apparent in the second phase.
