Ethereum Plummets 9% Amid Trade War Fears, Institutional Buying Surges

Ethereum ($ETH) experienced a significant drop of 9% on Friday morning, resulting in a loss of $298 million for 80,000 traders. This decline was part of a broader market crash, with Ethereum's price falling from $2,771 to $2,443 before stabilizing around $2,509. The sell-off was triggered by trade war fears, but savvy investors saw this as an opportunity to buy at a discount.

Despite the market turmoil, open interest in Ethereum surged to $35.22 billion over the past 24 hours. Major exchanges, including the Chicago Mercantile Exchange, Binance, Gate, and Bitget, witnessed heightened activity, with an average of $4 billion worth of $ETH exposure each. This influx of fresh capital suggests a continued upward trend, as more traders are opening or expanding their positions. Notably, an Ethereum whale placed a substantial $16.6 million long position, demonstrating strong bullish confidence in the altcoin.

Institutional investors have been aggressively buying Ethereum during the slump. BlackRock, the world’s leading asset management firm, has been purchasing Ethereum daily for over two weeks, accumulating a total of $570 million in ETH. According to data tracked by Arkham Intelligence, BlackRock now controls over 1.5 million $ETH, valued at $3.83 billion at current market prices. This significant investment by BlackRock underscores the growing institutional interest in Ethereum.

In parallel, SharpLink Gaming recently acquired 176,271 $ETH for $463 million, becoming the largest publicly traded holder of Ethereum. Ethereum spot ETFs have recorded positive inflows for 29 consecutive days, marking the first time such a sustained streak has occurred since their launch. This trend is driven by the SEC's more favorable stance toward decentralized finance (DeFi) protocols, with Ethereum serving as the primary infrastructure for DeFi applications. The supply of Ethereum on exchanges has dropped to its lowest level in eight years, which could drive prices higher rapidly. Many crypto investors believe these factors set ETH up to break $4,000 by late 2025. CLS Global, a major market maker, is even more bullish, eyeing $5,400 for Ethereum in the near term. Their long-term projection anticipates $7,000 by 2027, representing a substantial upside from current levels.

The Ethereum daily chart reveals that $ETH has been consolidating within a broad range between approximately $2,300 and $2,700, with current price action testing the lower boundary of this formation. A major breakout occurred in late 2024, when $ETH surged from around $1,800 to nearly $2,900 before entering the current sideways consolidation phase. The recent sell-off has pushed Ethereum back to test key support within this consolidation zone, specifically the $2,500-$2,550 area. This level is crucial. If $ETH breaks below it decisively, the sideways trading could come to an end, potentially leading to a fall toward $2,300 or even testing the $2,000 support level. However, if the current support holds strong, Ethereum could bounce back, with the next targets being $2,700-$2,800, the middle or top of its recent range.