Ethereum Plunges Below $3,000: A Deep Dive into Market Correction, Mass Liquidations, and Institutional Challenges

Following last week’s breach of the $4,000 mark, Ethereum (ETH) experienced a significant downturn last night (the 4th), mirroring a broader market decline. The cryptocurrency briefly retreated to the critical $3,000 threshold, marking a more than 20% drop within two days and reaching its lowest point since mid-July. This sharp correction is the second major price adjustment in less than a month.

As of this writing, ETH has seen a modest rebound, with its price recovering to $3,333. However, it still reflects an 8.3% decline over the past 24 hours, indicating lingering market volatility.

Massive Liquidations Rock Derivatives Market

This aggressive sell-off in Ethereum triggered a cascade of leveraged liquidations across the derivatives market. According to CoinGlass data, over $970 million worth of Ethereum positions were forcibly closed in just two days. The overwhelming majority of these liquidations were long positions, held by investors betting on an increase in ETH’s price.

Expert Analysis: Lack of Buying Support and Further Downside

Markus Thielen, founder of 10x Research, offered a sobering assessment of the situation. He noted that after Ethereum broke below a crucial support level, “there is a noticeable absence of buying support below, suggesting further downside potential in the short term.”

Institutional Buyer BitMine “Out of Ammunition”

Thielen highlighted a significant factor contributing to the current market weakness: BitMine, an entity that had been aggressively accumulating Ethereum over recent months, appears to have “run out of ammunition.” Its capacity to continue buying ETH and provide market support is now severely limited.

Currently, BitMine holds nearly 3.4 million ETH, with an estimated average acquisition cost of $3,909 per coin. This translates to an approximate unrealized loss of nearly $2 billion on its holdings. Thielen cautioned:

“While BitMine does not face an immediate liquidation risk, the real concern is: once BitMine exhausts its capacity, who will step in as the next incremental buyer?”

Cooling ETF Inflows and Trapped Investors

Further exacerbating the situation, capital inflows into Ethereum ETFs have significantly cooled. Thielen pointed out that during July and August, when BitMine was making substantial purchases, ETH ETFs recorded net inflows of an impressive $9.5 billion. However, since the market’s flash crash in October, market capital has largely dried up, with approximately $850 million flowing out to date. This suggests that a considerable number of ETF investors are currently holding positions at a loss, implying that Ethereum could experience further pullbacks as these investors seek to exit.

Declining Retail Interest Signals Broader Weakness

On another front, retail investor interest in Ethereum has also seen a substantial decline. Citing Google Trends data, Markus Thielen revealed that search volume for the keyword “Ethereum” has plummeted to roughly 13% of its historical peak, underscoring a significant drop in public engagement and speculative interest.

Future Outlook: Targeting $2,700 – $2,800 Support

With the bullish factors that propelled Ethereum towards its $5,000 high in August now largely dissipated, Markus Thielen projects that the next significant support zone for Ethereum will likely be found between $2,700 and $2,800.