Ethereum Drops 45% in Q1 2025, Whales Buy $90 Million During Crash

Ethereum, the second-largest cryptocurrency by market capitalization, has faced a challenging start to April 2025 as prices briefly crashed to $1,448, levels not seen since late 2023. The cryptocurrency is currently trading at $1,589, up nearly 3% in the last 24 hours, but remains in a bearish trend that has defined its performance throughout the first quarter.

Ask Aime: What factors led to Ethereum's price crash?

The first three months of 2025 have been particularly harsh for Ethereum holders. The cryptocurrency fell approximately 45%, equivalent to a $170 billion market value loss, marking one of its worst quarterly performances since 2016.

Despite the bearish backdrop, some large investors see opportunity in the downturn. On April 7, an Ethereum whale opened a massive $47.59 million long position using 20x leverage on Hyperliquid. The position holds 32,875 ETH with an entry price of $1,461.61. The wallet, linked to a trader known for high-risk entries, showed an unrealized loss of $454,076 at press time. However, this wasn’t the only significant purchase during the crash. Another entity, referred to as “Seven Siblings,” bought 24,817 ETH worth $42.2 million during the same dip. Despite suffering a $64 million loss across multiple positions, this whale continued accumulating. Their wallet now holds over $603 million in ETH, accounting for 98% of their total portfolio. These large purchases stand in contrast to the general market sentiment and highlight the divergent views on Ethereum’s future prospects.

Ethereum recorded $367 million in liquidations over the past 24 hours. A major ETH borrower on Maker was liquidated for 65,570 ETH after their collateral ratio dropped to 143%. Another wallet holding 56,995 Wrapped ETH was also liquidated, while one large vault faces a margin call at $1,495. Some whales attempted to escape forced liquidation by repaying loans or adding more ETH, though with limited success. Decentralized finance protocols now carry over $1.1 billion in ETH at risk of liquidation, based on levels tracked by DeFi Llama. This overhang of potential forced selling adds to the downward pressure on prices.

Grayscale’s Ethereum Trust (ETHE) reported outflows of $31.08 million last week. Ethereum spot ETFs recorded a total outflow of $49.93 million between March 31 and April 4. This consistent exodus suggests a pullback in institutional confidence as Ethereum struggles to maintain support levels. These outflows come at a time when the network faces increasing competition from layer-2 scaling solutions that offer lower transaction fees. The burn rate of Ethereum has dropped to its lowest since August 2021, with data showing only 53 ETH burned per day last week. This has led to the total supply of Ethereum increasing by almost 3% since the launch of the EIP-1559 upgrade.

Analysts at Standard Chartered have revised their end-of-year ETH price forecast downward from $10,000 to $4,000. They attribute this adjustment to active competition from Ethereum’s layer-2 scaling solutions, which have attracted users seeking lower transaction costs. Network activity metrics further point to these challenges, as fee generation has plummeted from $142 million in January to just $21 million in March. On-chain analyst Willy Woo noted that ETH’s internal rate of return over the past seven years has fallen to just 1.2%. This poor long-term performance has led some to question Ethereum’s self-proclaimed status as “ultrasound money.”

For those considering market entry, the $1,500 threshold remains crucial. If maintained, Ethereum could potentially move toward the psychological barrier of $2,000. Some analysts suggest the token could reach as high as $2,200 within weeks if market sentiment improves. Conversely, if bearish pressure persists, Ethereum could test support at $1,400 and potentially target the $1,000 level. The nearest resistance levels are at $1,850 and $1,920, with a break above the latter potentially triggering a rally toward $2,000.

Despite short-term challenges, Ethereum’s long-term outlook remains tied to its role in real-world asset tokenization. The network currently leads this sector with 54% market share and $5 billion worth of tokens. The RWA sector is projected to grow from $2 trillion to $16 trillion by 2030. The upcoming Pectra upgrade, now delayed until later in April, could potentially revitalize interest in the network. This update focuses on three key areas: improving the staking experience, adding wallet features, and upgrading network infrastructure. One notable enhancement will allow users to stake up to 2,048 ETH, offering relief to validators currently limited to 32 ETH per node. These improvements may help Ethereum regain momentum once implemented.

For now, Ethereum’s price action remains heavily influenced by broader market conditions, regulatory developments, and successful implementation of its technical roadmap. Both professional traders and retail investors maintain cautious short-term outlooks as derivative data indicates continued uncertainty.