Market Turmoil and Major Liquidation Event
On February 3rd, the cryptocurrency market experienced a significant downturn, with Ethereum at the epicenter:
- 24-hour liquidation volume: 72,000 traders liquidated, totaling $22.1B (estimated actual: $80-100B)
- Ethereum-specific impact: 25% single-day drop (largest since May 2021) with $380M in ETH contracts liquidated—exceeding Bitcoin's liquidation volume
This event amplified existing market skepticism toward ETH, with rumors suggesting institutional liquidations may have exacerbated the drop.
Key Metrics Analysis
1. Price Performance and Contract Open Interest
- Current price: $2,125 (near August 2024 low of $2,111)
- Decline from peak: 48% drop from $4,107 over 50 days
Contract OI:
- Peak: $30B (Jan 31)
- Post-crash: $23.7B (Feb 5) — $7B reduction
Despite weak price action, ETH futures markets saw record-breaking speculation, contributing to volatility.
2. U.S. Spot ETF Flows
Notable inflows:
- Dec 5: +$428M
- Feb 4: +$300M (third-largest inflow)
- Current AUM: $10.37B (3.15% of ETH market cap vs. Bitcoin ETF's 5.93%)
👉 Why institutional investors are accumulating ETH
3. On-Chain Metrics and Staking Trends
- Active addresses: Dropped from 553K (Jan 25) post-crash
Staking dynamics:
- Persistent net outflows since Nov 2024 (max daily outflow: 181K ETH)
- Total staked: 34M ETH (down from 34.95M peak)
- Network revenue: ~$1M/day (below historical averages)
4. Token Inflation Resurgence
- Current inflation rate: 0% (matching pre-Merge levels)
- Primary cause: Reduced burn rate post-Dencun upgrade
- Comparative note: ETH inflation remains lower than Bitcoin's
Market Outlook and Key Considerations
- Divergence: Spot ETF inflows contrast with futures market turmoil
- Recovery catalysts: Dependent on ecosystem activity growth
- Risks: High leverage positions continue to amplify volatility
FAQ Section
Q: Why did ETH liquidations exceed Bitcoin's?
A: Higher open interest in ETH derivatives markets combined with steeper price drops created perfect storm conditions.
Q: Are institutional investors still buying ETH?
A: Yes—U.S. spot ETFs show consistent inflows, including $300M on February 4th.
Q: What's driving ETH staking outflows?
A: Lower network yields and bearish sentiment are prompting validators to unstake.
👉 How to navigate crypto market volatility
This analysis provides a comprehensive view of Ethereum's current fundamentals amidst recent market turbulence. All data reflects conditions as of February 5th.