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The digital-asset sector has entered its sharpest correction since early 2022, erasing over $1 trillion in market value since October 6 as leveraged longs unwound and ETF investors withdrew capital. Bitcoin (BTC-USD) slid to $100,000, breaking its psychological floor for the first time since June, while Ethereum (ETH-USD) tumbled 16% in 48 hours to $3,303, marking the steepest two-day drop of 2025. XRP and Dogecoin (DOGE) followed, amplifying losses across the altcoin complex.
Federal Reserve Chair Jerome Powell’s hawkish tone ignited the selloff—rate-cut odds for December collapsed from 96% to 69.3%—triggering risk-off cascades in both crypto and equities. The Nasdaq 100 fell 2%, Nvidia (NVDA) lost $200 billion in market cap, and institutional outflows from spot Bitcoin ETFs reached $1.15 billion, led by BlackRock, ARK Invest, and Fidelity.
Ethereum’s drop below its 200-day exponential moving average ($3,601) shattered the consolidation zone built since July, flipping key support zones into resistance. The token fell through August lows and is now balancing precariously on the 50% Fibonacci retracement drawn from April’s $2,380 low to August’s $4,956 high, currently near $3,175. A daily close under that threshold would confirm a deeper descent toward $2,760–$2,650, with the 61.8% retracement and May–June highs converging there.
On-chain data confirm capitulation: long ETH liquidations totaled $484.8 million in 24 hours, while total market liquidations exceeded $1.7 billion. According to CoinGlass, open interest across ETH futures shrank 19% to $38 billion, its lowest since May, signaling mass deleveraging rather than panic selling.
Glassnode’s Spent Output Profit Ratio (SOPR), a proxy for realized profits versus cost basis, dropped to 0.97 from 1.08 in early October—its first dip below 1.0 since March. Historically, SOPR resets below 1.0 have preceded major bottoming events, as weak hands capitulate and long-term holders accumulate. Concurrently, Ethereum’s supply in profit fell 32%, from 78 million ETH to 53 million, reducing immediate selling pressure. These metrics suggest exhaustion rather than structural collapse.
Technical mapping reveals a bearish pennant formation following August’s peak at $4,956. ETH is now retesting the lower boundary near $3,300—the pivot for either stabilization or another 30% leg down. A decisive break below $3,300 projects a measured-move target at $2,380, matching the April floor. Momentum gauges echo caution: the RSI rebounded to 33 from oversold 18, hinting at short-term relief, while the MACD remains in a sell configuration. The 200-EMA at $3,601 now acts as the principal ceiling; a recovery above it could reignite momentum toward $3,950–$4,000.
Ethereum’s correlation with Bitcoin remains tight at 0.86, meaning BTC’s structural moves dominate ETH’s direction. BTC’s slip below $100k leaves room for a correction to $92k–$94k (Fibonacci confluence) and an ultimate washout near $74k–$76k if 200-EMA support breaks. ETF redemptions have drained liquidity from both majors. However, according to ChatGPT-referenced forecasts aggregated by Icobench, institutional accumulation cycles tend to re-emerge after capitulation events of this magnitude, often within 6–8 weeks.
On-chain analytics detect large early-cycle holders distributing coins during the selloff, consistent with whale-driven supply spikes on major exchanges. Analysts estimate billions in older BTC and ETH holdings were slowly offloaded between October 30 and November 4. Yet the subsequent stabilization of exchange inflows suggests that forced selling is largely complete. Historical analogues—June 2022 and March 2023—show ETH rebounded 38–45% within two months after such capitulation phases.
Fundstrat’s Tom Lee calls Ethereum “the best crypto to buy in the dip,” projecting $16,000 ETH by year-end 2025. He pegs the fair-value range between $12,000–$22,000, contingent on a return of the ETH/BTC ratio to its 2021 high of 0.087. The pair currently trades near 0.0365, implying a 138% relative upside if parity normalizes. Lee’s thesis is supported by Bitmine, which reportedly holds 3.24 million ETH (≈ 2.7% of supply) and targets 5% ownership—an institutional benchmark akin to gold ETF holdings.
Ethereum’s fundamental strength lies in its role as the settlement backbone for over 60% of all stablecoin issuance, currently $147 billion in circulation. With the U.S. Genius Act providing regulatory clarity under the Trump administration, analysts expect the stablecoin market to expand toward $2 trillion by 2030, creating structural demand for ETH gas fees. Ethereum’s uptime record—zero downtime since launch—has reinforced its credibility among institutional allocators migrating on-chain assets.
Part of Ethereum’s drawdown stems from the AI-bubble deflation spreading from equities. Palantir’s (PLTR) –8% plunge and Nvidia’s (NVDA) –4% slide in the same session fueled cross-asset deleveraging. Traders increasingly view crypto and AI equities as correlated risk proxies. The Nasdaq–ETH correlation, now 0.72, means equity weakness directly undermines crypto momentum. Yet historically, these synchronized selloffs often precede recovery once volatility compresses.
Approximately 441,867 traders were liquidated in the recent two-day crash, totaling $1.78 billion in forced positions. Funding rates across major perpetual futures turned negative (-0.013% average), suggesting shorts are paying longs—a contrarian bullish signal. Market sentiment indexes show “Extreme Fear” at 19/100, typically aligning with cyclical bottoms.
Medium-Term Technical Framework
Support levels: $3,175 / $2,880 / $2,380
Resistance zones: $3,600 / $3,950 / $4,000
RSI: 33 (oversold recovery) MACD: bearish slope SOPR: 0.97 (accumulation)
A sustained daily close above $3,400 would trigger a relief rally toward the 50-SMA ($3,700); failure to hold $3,175 confirms continuation to $2,650–$2,380.
Despite short-term weakness, Ethereum’s structural narrative—dominance in smart-contract settlement, institutional positioning, and stablecoin infrastructure—remains intact. The SOPR reset and 32% drop in supply-in-profit signal cleansing rather than collapse. However, macro headwinds (Fed caution, equity drawdown, and ETF outflows) limit near-term upside.
Trading bias: accumulate selectively between $2,900–$3,200.
12-month target: $4,500–$5,000 on recovery of risk appetite and ETH/BTC convergence.
Verdict: BUY-ON-DIP / Medium-Term Bullish, Short-Term Neutral.
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