Ethereum’s drop to its lowest level in more than a year is testing Wall Street trading that has pushed the token deeper into institutional portfolios.
Source of data CryptoSlate The second-largest cryptocurrency fell to $1,506 in the past 24 hours, its weakest level since April 2025, extending a widespread cryptocurrency sell-off that had already drained leverage in derivatives markets and forced traders into defensive positioning.
Crucially, the decline is not limited to ETH’s spot market. That’s because digital assets are experiencing a broader deterioration across regulated ETF flows, centralized exchange deposits and derivatives positioning.
This comes at a time when broad cryptocurrency market sentiment has weakened significantly, with Bitcoin falling to a four-month low near $60,000 and Ethereum erasing much of its market support.
Institutional Bidding on Ethereum Weakens as ETF Outflows
This pressure has been most pronounced in the ETF market, where products that provided institutions with a regulated way to buy Ethereum have been the source of ongoing outflows.
Spot ETH ETFs have seen withdrawals totaling more than $870 million for four consecutive weeks, according to data from SoSoValue.
During that period, the fund recorded 17 consecutive days of outflows, interrupted by just one day of inflows, when investors added $19.3 million.
As a result, total spot Ethereum ETF assets fell more than 70% to $8.71 billion from a peak of $30 billion, according to sosoValue data. This corresponds to approximately 4.01% of Ethereum’s circulating market capitalization.
This reversal undermines one of the main arguments supporting Ethereum’s institutional expansion. ETFs were expected to expand access to assets, deepen liquidity, and provide existing investors with a cleaner way to gain exposure without having to deal with tokens directly.
However, this demand has weakened as the price of ETH has fallen and investors have reduced risk across digital assets.
Exchange inflows add another layer of supply risk.
As institutional demand-side forces weakened, the physical supply available on liquid trading platforms experienced a sudden and significant expansion.
Ethereum inflows into trading platforms rose to around 2.24 million ETH in a single day, the highest level in four months, according to CryptoQuant data. Binance accounted for over 1.16 million ETH of inflows, accounting for more than half of total inflows.
This surge in active supply can be seen in high-profile on-chain movements that have served as visible evidence of liquidity movement.
In particular, a wallet linked to Ethereum co-founder Joseph Lubin woke up from dormancy for over three years and mobilized 80,001 ETH, worth about $122 million.
The large-scale transfer highlights a broader trend of long-term inactive capital moving out of cold storage and seeking active trading venues and liquid architectures amid mounting market stress.
Large inflows into a trading platform do not automatically mean investors will sell. This may reflect market making activity, collateral movements, internal transfers or portfolio restructuring during periods of stress.
However, traders watch the metrics closely because coins held on exchanges are easier to sell or use in derivatives activities than coins held in personal wallets.
The timing makes the increase harder to ignore. Ethereum was already trading near $1,580 when inflows accelerated, while Bitcoin fell to $59,000. This combination suggested that investors were moving assets during a market-wide reset rather than a routine relocation period.
If exchange deposits continue to increase, the market may face additional near-term volatility.
Derivatives deleveraging deprives markets of rebound capital
The pace of the current cryptocurrency market decline has been accelerated by a widespread deleveraging cycle across leveraged futures platforms.
As spot valuations deteriorated rapidly, automatic clearing engines on major exchanges systematically liquidated underwater long positions to protect clearinghouse integrity, amplifying organic selling pressure.
Data analyzed by Santiment shows that this wave of liquidations effectively drove out a huge block of speculative capital over a period of as little as four days.
- Bitcoin total open interest: decreased by about 25% to $23.2 billion, the lowest operating total since early April.
- Ethereum total open interest: decreased 13%, reaching $9.8 billion. This is a structural low not seen since March.
This aggressive deleveraging makes the underlying markets structurally healthier by eliminating speculative excess and excessive margins, but it also creates an immediate liquidity vacuum.
The sharp decline in open interest shows that the speculative floor has thinned, leaving the market highly vulnerable to further spot pressures due to the lack of immediate leverage capital that could hasten a typical V-shaped recovery.
As a result, retail public sentiment is on its most pessimistic basis since mid-February.
The company noted that social metrics reveal an exponential increase in expressions of capitulation, with organic social discussions increasingly combining terms like “Bitcoin” and “altcoins” with definitive descriptors like “dead,” “done,” “finished,” and “finished.”
Traders hedge for a break below $1,500.
As stress builds across ETFs, exchange flows, whale cost basis and leverage markets, attention has shifted to ETH’s options market where traders are paying more to prevent another leg downside.
Demand for downside protection has increased sharply, according to Deribit data. The ETH options put-to-call premium rose to 3.7x on Friday, showing continued excess demand for puts since Monday. Put contracts give the holder the right to sell at a set price, making them a common hedge when traders anticipate further losses or want protection against disorderly movements.
ETH’s open interest has been centered around multiple downtrends. Traders built approximately $108 million in open interest at the $1,500 strike, and raised about $75 million at the $1,400 strike. The $1,000 strike resulted in approximately $78 million in positioning costs.
These levels do not mean that the market expects ETH to fall to $1,000 immediately. Instead, it shows that traders are paying for protection after multiple support signals weaken simultaneously.
Data from BlockScholes also shows changes in volatility pricing. ETH’s near-term implied volatility has surged from this year’s low of 36% to 67%, indicating that traders are now expecting larger price movements in the near-term.
This move was accompanied by a sharper bias towards out-of-the-money put options. The 7-day ETH options skew has moved to around -14% compared to around -3% to -4% at the end of May. Additionally, demand for put options was spread across 7-day, 14-day, 30-day, and 90-day maturities.
This expansion shows that traders are not just hedging a single event or a single short-term movement. They are bracing for the possibility that Ethereum’s weakness could extend if ETF outflows continue, exchange inflows continue to increase and large holders remain below key cost levels.
The next test is whether $1,500 will be the bottom or the trigger. A stabilization of ETF flows and a decline in foreign exchange deposits could help ease the pressure.
Otherwise, the options market’s focus on downside strikes may be the clearest signal of where traders expect the next round of selling to be concentrated.