The crypto market has suffered a heavy blow, and the outlook for ETH has drawn follow.

The crypto market has remained sluggish since early August, with multiple factors contributing to the deterioration of market sentiment. Escalating geopolitical tensions, the Bank of Japan's interest rate hikes triggering stock market sell-offs, disappointing U.S. employment data, and the poor performance of tech giants have collectively led to a wave of large-scale sell-offs.

On August 5th, as traditional financial markets plummeted sharply, the crypto market also experienced a crash. Data shows that the total liquidation amount across exchanges reached 1 billion USD within 24 hours, with Bitcoin and ETH contributing 350 million USD and 342 million USD in liquidation amounts, respectively.

On-chain analysis shows that the sharp decline in ETH prices has triggered a large number of liquidations from whale accounts, further exacerbating the downtrend. Multiple large holding addresses have been forced to sell ETH to repay loans, with liquidation amounts ranging from millions to tens of millions of dollars.

In the past week, the price of ETH plummeted from around $3300 to below $2200, a decline of over 30%. In addition to the overall weakness of the market, the sharp drop in ETH was also influenced by increased leverage liquidation pressure and large institutions selling off.

According to reports, a well-known trading institution recently transferred a large amount of ETH to the exchange, sparking market speculation. Some analysts believe this may be related to the institution's margin increases in the traditional market or its exit from the encryption business. At the same time, several mainstream market makers have also concentrated on selling ETH recently, with a total exceeding 130,000 pieces.

This crash has led to a total liquidation amount of over $445 million for ETH in the past 24 hours. The liquidation scale on DeFi platforms has also reached a new high for the year, amounting to $320 million. Among them, the liquidation amount of ETH collateral has reached $216 million.

After the plunge, panic sentiment in the crypto market has significantly risen, with the Fear and Greed Index dropping to 26, at a relatively low level since 2023. However, the market fundamentals have not been fundamentally damaged, and there is limited room for further significant declines in the short term.

From the perspective of the ETH spot ETF, it is currently still in a net outflow state due to the poor timing of its launch. In contrast, the Bitcoin spot ETF has performed more strongly, with a cumulative net inflow of approximately $17.5 billion. This is also one of the important factors supporting the relative stability of Bitcoin prices.

Although ETH currently lags behind Bitcoin in terms of institutional investor recognition, the launch of the ETH spot ETF itself is an important milestone in the regulatory progress of the encryption industry. In the long term, as traditional institutions gain a deeper understanding of ETH's fundamentals, it is expected to attract more capital inflows in the future.

Historically, August and September are often a weak period for the crypto market, while after October, the market tends to be relatively optimistic. In addition, the market generally expects that the Federal Reserve may start to cut interest rates in September, which could improve liquidity and bring new growth momentum to ETH.

Overall, although ETH faces many challenges in the short term, as an important public chain in the encryption field, its long-term development potential remains immense. This market capitalization correction has also created better positioning opportunities for institutional investors. In the future, as the macro environment improves and the industry fundamentals become more favorable, ETH is still expected to regain upward momentum.