Ethereum market capitalization evaporated by $80 billion, with $428 million in ETF record redemptions in a single day triggering panic in the altcoin market.

According to Bloomberg, after a period of rapid advance, Ethereum has experienced a significant pullback, with its native Token ETH dropping about 20% from its peak, resulting in a market capitalization evaporation of approximately $80 billion. This has raised doubts about its long-term prospects as a "real-world infrastructure." In a recent trading day, ETH fell as much as 9.3% to $3,893. Amidst the price decline, investors redeemed about $428 million from funds tracking ETH, marking one of the largest single-day outflows in history, with BlackRock's ETH fund alone seeing redemptions of $310 million. This sudden market pullback and record capital outflow highlight the inherent volatility of alts, which are more susceptible to dumping compared to Bitcoin in a risk-averse sentiment.

ETH Suddenly Reverses: High Fluctuation and Risk Aversion

The recent sharp pullback of ETH is a typical manifestation of the risk aversion sentiment in the macro market, where funds are withdrawing from high-risk assets.

· The significant evaporation of price and market capitalization

(Source: Bloomberg)

ETH price has fallen about 20% from recent highs, resulting in a market capitalization loss of approximately $80 billion. In recent Tuesday trading, ETH once plummeted 9.3%, hitting a low of $3893, while Bitcoin only dropped about 3% to $112175 during the same period. According to CoinGecko data, smaller volatility tokens also declined, causing the total market capitalization of the entire cryptocurrency market to evaporate by more than $150 billion within 24 hours.

· Why is ETH more susceptible to shocks than Bitcoin?

Noelle Acheson, the author of "Crypto is Macro Now," points out that this punitive fall is "largely due to the recent strong performance of ETH and the fact that it is more volatile than BTC." She explains that in a "risk-off" sentiment, if investors have to reduce their holdings in crypto assets, they are "more likely to sell ETH rather than Bitcoin."

· The characteristics of "tech stocks" lead to high Fluctuation.

Roxanna Islam, the Director of Industry Research at VettaFi, believes that Ethereum "is more like a tech trade, so you will see higher fluctuations." She pointed out that in the past year, Ethereum has experienced several instances of significant price falls.

Institutional Funds See Record Outflow: BlackRock Fund Hit Hard

The price big dump directly triggered a huge shock in the ETF market, with institutional funds withdrawing in large amounts.

· ETF faces one of the largest single-day redemptions in history

In the recent trading period, investors redeemed about $428 million from funds tracking ETH, marking one of the largest single-day outflows on record.

Among them, the largest ETH fund - BlackRock's ETH fund, had a redemption amount of approximately 310 million USD, marking the second largest single-day redemption since the fund's launch in July 2024.

· Leverage liquidation in perpetual contract market

FRNT Financial Inc. CEO Stephane Ouellette added that the perpetual contract market has experienced severe deleveraging. Amid a widespread wave of liquidations, the open interest of Bitcoin and ETH contracts on mainstream CEXs has fallen by approximately 40%. This liquidation indicates that a large number of traders have suffered unexpected losses.

Long-term Beliefs and Short-term Fixes: The Reverse Operation of BitMine

Despite the market being in panic, some institutions are still accumulating at low levels, but the fluctuations caused by liquidation will continue.

· BitMine goes against the trend to acquire over 200,000 ETH

As the market falls, the digital asset financial company BitMine Immersion Technology Inc. (whose chairman is Tom Lee, head of Fundstrat Global Advisors) announced that it has acquired over 200,000 ETH tokens worth more than $79 million in the "past few days", bringing its total cryptocurrency holdings to over $3 billion. This represents institutional confidence in the long-term value of Ethereum.

· Volatility warning during the recovery period

Ouellette emphasized that after such a big dump, the market usually experiences higher Fluctuation during the recovery phase, as a large number of traders who experienced unexpected liquidations need to re-establish their positions and fix their accounts.

· Structural challenges of the alts ecosystem

This big dump has raised doubts about the future of the altcoin ecosystem, with participants concerned that the structural support underpinning these tokens is weakening.

Conclusion

The story of Ethereum in mainstream adoption and institutionalization is facing severe challenges due to this sharp price pullback and record ETF redemptions. The higher volatility of ETH compared to Bitcoin has made it the first target for investors to sell in a risk-averse sentiment. Although institutions like BitMine are still strategically accumulating at low levels, the significant decrease in open contracts due to liquidation events indicates that the market will still experience a highly volatile repair period as it re-establishes stable positions. This adjustment serves as a sobering reminder for all alts: in the crypto world, the connection between belief (technical prospects) and price (liquidity/risk sentiment) remains inseparable.

This article is for news information and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make cautious decisions.