Ethereum (ETH) has recently experienced a significant fall, primarily due to whale sell-offs, macro Unfavourable Information, derivation market leverage liquidations, and its own ecological factors. Let me explain this in detail for you.

🪙 Reasons for the Ethereum fall and future outlook

📉 Ethereum recent price trend

As of August 26, 2025, the price of Ethereum has fallen below the $4500 mark, even briefly dropping below $4600. From the high point of $4950 on August 25, it has decreased by nearly $600. This drop has set a new low for Ethereum in almost two weeks.

🤔 Main Reasons for the Fall

The recent fall of Ethereum is not caused by a single factor, but rather the result of multiple unfavourable information factors stacking up:

1. Whale Sell-Off and Market Chain Reaction: On-chain data shows that a Bitcoin whale, who has been dormant for five years (with a 2011 entry cost of less than $10), suddenly sold $11 billion worth of BTC and transferred the funds to Hyperliquid exchange, making large purchases of Ethereum spot and futures. This action not only triggered a follow-up sell-off from algorithmic trading but also led to a series of liquidations of high-leverage long positions after the price fell below key support levels, creating a "sell-off → liquidation → re-sell-off" death spiral. In the past 24 hours, the total liquidation amount across the network reached as high as $904 million (with long positions accounting for 90%), and there was even a situation where liquidations exceeded $71.87 million within a single hour.
2. Deterioration of the macro environment and reversal of liquidity expectations:
· Inflation data rebounds: The US June core PCE annual rate rose to 2.8% (higher than the expected 2.7%), and import tariffs have pushed up commodity prices, which has weakened the space for a shift in Federal Reserve policy.
· Expectation of interest rate cuts cooling down: Although Federal Reserve Chairman Powell has released dovish signals, the strong statements from officials such as the President of the Cleveland Fed (emphasizing that "inflation data does not support a rate cut") have significantly reduced market expectations for a rate cut in September from the previous 98% to 84%. The expectation of tightening macro liquidity has decreased the attractiveness of risk assets.
3. Ethereum's own ecological factors:
· Huge Pledge Unlock Pressure: The current exit queue on the Ethereum proof-of-stake network has reached 910,461 ETH, with a value of approximately $3.91 billion of pledged ETH seeking redemption. This represents a significant gap compared to the new staking demand (around $1.09 billion), creating substantial supply surplus pressure.
· Network activity and growth slowdown: The number of active Ethereum addresses interacting with the blockchain has decreased by 28% from a peak at the end of July, and network growth (an indicator tracking new addresses) has also declined by 28% during the same period, indicating insufficient short-term adoption rate and user interest.
· ETF fund inflows slow down: The Ethereum ETFs that had previously seen continuous fund inflows experienced consecutive fund outflows late last week and on Monday, indicating a slowdown in institutional investor interest ahead of key macro events (such as the Federal Reserve's Jackson Hole meeting) and the exit of staked supply.
4. Derivation Market High Leverage and Emotional Divergence: The cryptocurrency derivation market is showing a bizarre divergence. On one hand, the futures open interest has surged to a historical peak, indicating that speculative capital is still betting on the future market. On the other hand, the option market Delta skew has risen to -10% (put option premium), reflecting that institutions are hedging against the risk of a crash at a higher cost, with strong bearish sentiment in the market. This high-leverage long position can easily trigger a chain liquidation during market declines, exacerbating the fall.

💎 Ethereum fundamentals and long-term perspective

Despite facing significant pressure in the short term, understanding some fundamental factors of Ethereum can help you better assess its long-term value:

· Institutional Participation: There are signs that Wall Street institutions may be buying on dips. For example, Bitmine Immersion Technologies purchased $45 million worth of ETH in a single day, and the strategy of publicly traded companies regarding staking returns may attract long-term capital.
· Liquidity Locking Effect: Nearly one-third of the ETH supply has been staked, and this portion of assets is to some extent "locked up," reducing the actual supply in circulation.
· Market absorption capacity: Despite facing enormous unlocking pressure, the market's ability to absorb such supply shocks is also considered "strong" by some analysts, thanks to the robust inflow potential of institutional ETFs and digital asset pools.

🔮 Future Outlook and Key Observations

The subsequent trend of Ethereum and the cryptocurrency market will closely depend on the following factors:

1. Key macroeconomic data and Federal Reserve policies: The upcoming release of the U.S. July core PCE price index (expected annual rate of 2.9%) and unemployment data will be the market focus. If the PCE data exceeds expectations (e.g., jumping to 3.2%), it may completely crush hopes for a rate cut in September, leading to further pressure on the market; if the data is mild and the unemployment data is weak, it may reignite expectations for a rate cut, driving a rebound.
2. Market's digestion of supply pressure: Observing whether the market can effectively absorb the selling pressure brought by the unlocking of nearly $4 billion in staking, and whether ETF capital inflows can recover.
3. Key technical positions: Bitcoin and Ethereum need to recover some key technical levels to reverse the short-term decline. For example, Bitcoin needs to return above the weekly opening price of $113,400; Ethereum also needs to stand firmly at the key support level again.

💡 Advice for Investors

· Short-term volatility is severe, and the high-risk, high-reward nature of the cryptocurrency market is vividly demonstrated in this fall. Investors should avoid excessive use of leverage and implement proper risk management.
· Focus on long-term value: For investors who firmly believe in the long-term value of blockchain technology and Ethereum, the market's deep correction may provide relatively cheap entry opportunities. However, it is always wise to remain cautious and patient when uncertainty envelops the market.
· Closely track information: Pay timely attention to the Federal Reserve's monetary policy signals, important macroeconomic data (especially PCE and unemployment data), and the changes in Ethereum on-chain data (such as staking dynamics and the number of active addresses).

The market is currently torn between "liquidity expectations" and "inflation realities." It is recommended that you closely monitor the U.S. core PCE data to be released later this week, as it could be an important catalyst for determining the short-term direction.

I hope the above analysis can help you better understand the reasons for the recent fall of Ethereum. If you have more questions about specific aspects, I would be happy to provide further information.