Data review of Ethereum's "Darkest Moment": contracts are in liquidation of US$380 million, pledge continues to flow out, inflation returns

Author: Frank, PANews

On February 3, the crypto market ushered in another dark moment, and the entire crypto market ushered in a sharp drop in a short period of time. Within 24 hours, the number of people who have cryptocurrency liquidated their positions on the entire network reached 720,000, with a total amount of US$2.21 billion (due to incomplete statistics, Bybit CEO Ben Zhou speculated that the real data may reach US$8 billion to US$10 billion), of which 1.87 billion were liquidated their positions on long positions. USD, short orders of USD 340 million. Ethereum was particularly eye-catching in this round of plunge, with a plunge of 25% on the same day, setting the largest single-day decline in the past four years (since May 2021). In addition, the total liquidation amount of Ethereum on that day reached US$380 million, exceeding the contract liquidation amount of Bitcoin.

After this round of liquidation storm, the market's disappointment with Ethereum reached its peak. There are also rumors that some industries have giant whales or institutions that are exposed in this round of market, which has led to a plunge in ETH. So, what is the current fundamentals of Ethereum after experiencing this storm? PANews analyzes contract positions, ETF capital inflows, on-chain data, token inflation and other aspects to see the full picture of Ethereum.

Prices have smoothed out their annual gains, and contract positions have

hit new highs

First of all, from the perspective of price, Ethereum hit a minimum of US$2,125 in this round, although it was not as low as the US$2,111 that was pulled back in August 2024. But this time the single-day amplitude is larger and it is very lethal for the contract market. From the high of this round of $4,107 to the lowest, the pullback in the past 50 days reached 48%, and the price almost returned to the level in early 2024. This is also the reason for the resentment of long-term holders.

Although Ethereum's market performance has not been impressive in the past year, judging from the contract holdings, Ethereum's open positions on various exchanges have been increasing, and has repeatedly broken historical records. According to coinglass data, as of January 31, Ethereum's total contract holdings reached US$30 billion, while when Ethereum reached an all-time high of US$4,800 in 2021, the data was only US$11.4 billion. As the market plummeted, as of February 5, the amount of open contracts on Ethereum dropped to US$23.7 billion, a drop of nearly US$7 billion.

From the comparison changes in holding volume and price, it can be seen that there seems to be a huge difference between Ethereum's market expectations and actual expectations, which has led to continuous betting on funds, resulting in severe fluctuations in this short-term sharp drop.

Are you buying at the bottom in the US spot ETF market recently?

In terms of the inflow of Ethereum ETF funds in the United States, starting from November 6, we can see that the net inflow of Ethereum ETF funds from various institutions have increased significantly. The highest single-day net inflow of US$428 million on December 5. Of course, with the fluctuations in Ethereum prices fluctuating greatly, the amount of net inflows and net outflows in a single day has increased significantly. On January 8, the net outflow of ETFs in a single day also reached US$159 million, the highest in history. On February 3, although Ethereum prices plummeted, the contract market suffered heavy losses. However, ETF funds did not cause outflows, but set the third highest record of a single-day net inflow of US$300 million on February 4. From this point of view, for traditional American market institutions, it seems that they are rushing to buy chips in this range.

As of February 4, the current net asset value of Ethereum ETF is approximately US$10.37 billion, accounting for 3.15% of Ethereum's market value. In comparison, BTC's total net asset value of ETFs is approximately US$116 billion, accounting for about 5.93% of the market value, significantly higher than Ethereum. Judging from this data, ETFs currently have little impact on Ethereum's market trend.

On-chain data hesitates, and the pledge volume continues to flow out

Of course, this round of decline is essentially caused by other macro factors. The plunge in Ethereum is just the most vulnerable link in this round of decline. Judging from the data on the chain, the number of daily active addresses of Ethereum just hit a year's second highest of 553,000 on January 25, before the plunge, and has been in a downward state since then. In terms of on-chain revenue, the revenue level of the Ethereum main network is far lower than the same period a year ago. The daily income at lows was only about $1 million. This may also explain why the inflow of on-chain pledge volume has been at a negative value since mid-November.

Data shows that since mid-November 2024, the net inflow of the on-chain pledge volume of Ethereum within two weeks has been negative, with the maximum net outflow of 181,000 in a single day. Judging from the current data, this data item is still below the 0 axis, which is the longest time since Shanghai upgraded. Previously, from April 12 to April 30, 2023, the net outflow was maintained for more than half a month. The market trend at that time was a short-term high and then a decline, with the maximum pullback of about 16%. The net outflow time this time has been as long as 84 days, and the price’s largest pullback from its high point has reached nearly 50%.

In terms of the number of pledges, the data reached its historical peak on November 10, 2024, with about 34.95 million Ethereum and 1.09 million pledges. The data has shown a downward trend, with the current number of pledges being about 34 million and the number of pledges being about 1.06 million.

In addition to the above, Ethereum's inflation has also become a focus of attention in the market recently. Since Ethereum switched from POW to POS, one of the market's major supply expectations for Ethereum is that it will realize the deflation model through token combustion in the future. However, recently people have found that after more than a year of deflation and inflation, the number of new tokens in Ethereum has completely wiped out the deflation caused by previous burns. As of February 5, data showed that Ethereum's inflation rate has returned to 0 again % is no different from before the merger. According to analysis, the main reason for this change is that Dencun has reduced the number of on-chain token burns after the upgrade.

However, even so, compared with the POW issue additional issuance model, the inflation rate of POS is still far lower than that of the POW model overall. At the same time, Ethereum's current inflation rate is also smaller than BTC.

Overall, the market fluctuations in Ethereum are caused by external factors affected by macro factors as the lead, and the continued increase in contract positions, bets, and poor performance of on-chain data. The downturn caused. The final result is that the long and short positions both fell significantly. After the plunge on February 3, the price quickly closed above US$2,900 in the short term. At the same time, the funds of US spot ETFs are also inflowing, which reflects the differences between the emergent market and the futures market.

Next, perhaps the biggest key to really pushing the market backlash is whether the activity data of the Ethereum ecosystem can truly achieve real growth. Otherwise, the short-term trend will still be difficult to figure out. For investors who are keen on fighting for leverage and contracts, buying at the bottom and shorting are full of risks.