Ethereum's 17.8% Plunge: Crypto Market's $2.3B Bloodbath

Ethereum's Price Plunge: A Deep Dive into the Crypto Market's Latest Turmoil

Ethereum, the second-largest cryptocurrency by market capitalization, experienced a significant price drop on Monday, February 3, 2025, as the crypto market grappled with a massive liquidation event. The decline, which saw Ethereum trading at a low of $2,368, marked a staggering 17.8% drop in a single day, driven by external pressures including new U.S. tariffs instituted by President Trump.

The aftermath was swift and harsh, with the crypto market experiencing over $2.3 billion in liquidations across 738,000 traders within 24 hours. Data from CoinGlass revealed that long traders faced the heaviest consequences, incurring losses totaling $1.9 billion and representing 84% of the overall liquidations. Within this framework, Ethereum long positions were hit particularly hard, amounting to $473 million of the total liquidations.

Min Jung of Presto Research underscored that Ethereum's performance has deviated significantly compared to other major cryptocurrencies, such as Bitcoin and Solana, depicting a market trend that appears increasingly unfavorable for ETH holders. An analysis of the broader environment indicates that the crypto market's turbulence is intertwined with current geopolitical dynamics, notably Trump's tariff announcements. The implementation of 25% tariffs on imports from Canada and Mexico, alongside a 10% tariff on China, could signal inflationary pressures that complicate the fiscal landscape. Jack Tan, a co-founder of crypto exchange WOO X, emphasized that these conditions render crypto assets less effective as short-term hedges against market volatility.

As Ethereum faced its largest single-day decline since May 2021, market sentiment has shifted sharply towards caution, with the Fear and Greed Index indicating a sharp rise in panic among investors. Analysts from QCP Capital noted that current market behavior suggests reactive shifts driven by wider asset reallocations rather than isolated events affecting cryptocurrencies. This sentiment often heralds potential buying opportunities in times of elevated fear, reflecting a historical pattern observed in past market cycles.

The volatility surrounding Ethereum reached unprecedented levels during this tumultuous trading session, with metrics showing its one-day at-the-money volatility