Behind ETH's 1.57% decline: Institutional strategic game amid the impact of the Truebit theft incident

Ethereum experienced a short-term correction today, currently trading at $3109.51, down 1.57% within 24 hours. This decline is not an isolated event but the result of multiple factors acting together: security incidents within the ecosystem have sparked market concerns, yet at the same time, institutional investors continue to increase their positions, leading to a tug-of-war between risk release and bottom support.

Security Incidents Trigger Short-Term Decline

On the evening of January 8, the Truebit protocol was hacked, resulting in a loss of 8,535 ETH (approximately $26.44 million). This event directly impacted market sentiment. Truebit is an important verification and off-chain computation layer project within the Ethereum ecosystem. Its smart contracts were exploited by hackers, exposing security risks at the application layer.

Such security incidents often have a greater psychological impact on investors than the actual loss size. Although over 8,500 ETH accounts for a small proportion of the entire ecosystem, it serves as a reminder that even projects built on Ethereum can face smart contract vulnerabilities. This concern has temporarily suppressed ETH’s price.

Market Structure Indicates Risk Release Nearing Completion

From a broader perspective, this decline may be the final phase of the market’s de-risking process. According to recent analysis, the previous “de-risking” phase in the crypto market is nearing completion. Key signals include:

Continuous institutional accumulation signals

Bitmine, the largest corporate holder of ETH, has invested $105 million to increase its holdings early in 2026 and currently holds $915 million in cash reserves. The institution has accumulated 4.07 million ETH, accounting for 3.36% of the total ETH supply, with a target to increase this to 5%. Notably, Bitmine has recently accelerated staking, adding approximately 128,000 ETH.

The US Ethereum ETF also shows net inflow signals, with a net inflow of 25,608 ETH today, contrasting with net outflows from Bitcoin ETFs, reflecting a relatively optimistic market sentiment toward Ethereum.

De-risking pressure easing

JPMorgan’s analysis suggests that the phase of simultaneous retail and institutional de-risking in Q4 2025 has basically ended. Indicators from perpetual contracts and futures positions show selling pressure is easing. This indicates the market is transitioning from passive risk release to active position building.

Derivatives Market Liquidation Pressure Points

Although bottom support is strengthening, short-term liquidation pressures in the derivatives market should still be monitored:

This Friday, $384 million in nominal ETH options will expire, with the maximum pain point at $3,100. This suggests potential additional volatility around this price level.

It’s worth noting that whales have completed short covering and shifted to 3x leveraged long positions on 20,000 ETH (worth about $62.2 million), indicating a change in large capital’s short-term outlook. However, in the past 24 hours, ETH contracts have experienced $77.5 million in liquidations, predominantly longs, highlighting ongoing short-term volatility risks.

Market at a Critical Balance Point

Current data shows ETH is in a delicate equilibrium: on one hand, the Truebit security incident and short-term price decline have triggered risk concerns; on the other hand, signals such as large institutional accumulation, increased staking demand, and nearing de-risking completion point toward a bottom formation.

This divergence suggests ETH may continue to fluctuate within the $3,000–$3,300 range in the short term. Key points to watch include: the price behavior at options expiry this Friday, whether institutions continue to increase holdings, and whether the Truebit incident triggers a chain reaction within the ecosystem.

Summary

ETH has declined 1.57% today mainly due to the Truebit theft incident, but this could be the final stage of the market’s de-risking process. Strengthened institutional positioning, increased staking demand, and stabilizing market sentiment all support a bottom. Derivatives liquidation pressures remain a concern, especially around the upcoming options expiry this Friday. Overall, the market is balancing between risk release and institutional accumulation; short-term volatility is inevitable, but the medium-term trend may be upward.