Ethereum Tanks Even as Exchange Reserves Dry Up

ByMason Drake

Ethereum’s price collapsed to an intraday low of $1,601 Monday, plummeting over 10% in a severe selloff that outpaced even Bitcoin’s decline. The sharp drop marks Ethereum’s lowest trading level since October 2023, erasing months of gains and pushing the ETH/BTC ratio to its lowest point since March 2020, according to data from U.Today.

While Bitcoin has fallen below the $79,000 level to $78,882, its losses have been less catastrophic. The broader cryptocurrency market selloff comes as investors continue to react to global economic uncertainty triggered by President Donald Trump’s sweeping tariff announcements, which have already wiped more than $6 trillion from U.S. stock markets last week.

“I, for one, am super excited to get to buy ETH at double digits again,” analyst Adam Cochran sarcastically noted on social media platform X, highlighting the severity of the collapse that has left many investors questioning how much lower prices might go.

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Exchange Supply Paradox

Despite the bearish price action, on-chain data reveals a potentially bullish divergence that could set the stage for an eventual recovery. According to CryptoQuant data shared by analyst Quinten Francois and reported by Bitcoinist, Ethereum’s supply on centralized exchanges has been steadily declining since 2022.

This persistent reduction in exchange reserves suggests that long-term investors may be moving their assets to cold storage or staking platforms rather than keeping them available for immediate selling. Historically, such trends often precede significant price rallies once sentiment shifts and demand returns to the market.

The disconnect between plummeting prices and shrinking exchange reserves creates a potential setup for a supply squeeze scenario. When available liquidity on exchanges diminishes, even moderate buying pressure can trigger outsized price movements due to limited sell-side resistance.

Technical Breakdown

Ethereum’s technical picture remains decidedly bearish in the short term. The cryptocurrency is trading well below both its weekly 200-day moving average around $2,500 and its exponential moving average near $2,250, which now represent significant overhead resistance levels.

The critical $1,800 support zone, which many analysts viewed as the last line of defense before deeper losses, has now decisively broken. This technical breakdown could trigger further selling unless bulls quickly reclaim this threshold.

“Ethereum is now in a precarious position where further weakness could trigger cascading liquidations from leveraged positions,” explained Michael Walters, cryptocurrency market analyst at Digital Asset Research. “The $1,600 level represents the next major support zone that must hold to prevent an acceleration toward $1,400 or lower.”

Wall Street Prepares for More Pain

The cryptocurrency selloff mirrors broader concerns in traditional financial markets. Fox Business reporter Charles Gasparino noted that major Wall Street trading desks are preparing for “intense selling,” with some comparing current market dynamics to the 2008 financial crisis.

Jason Calacanis, a prominent American angel investor, has predicted Bitcoin could potentially plunge to $60,000 this year. If Bitcoin experiences such a decline, Ethereum would likely face proportionally larger losses given its higher historical volatility.

Other major cryptocurrencies are suffering similar fates in the current market rout. Dogecoin (DOGE) and Solana (SOL) are approaching double-digit percentage losses as the contagion spreads throughout the digital asset ecosystem.

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Potential Recovery Path

For Ethereum to reverse course, it must first reclaim the $1,800 level and then push above $2,000—a key psychological threshold. Such a recovery would require a significant shift in market sentiment and likely coincide with stabilization in traditional financial markets.

While current conditions remain overwhelmingly bearish, the continuing reduction in exchange supply provides a potential foundation for recovery once macro pressures ease. Ethereum now trades approximately 55% below its December high, potentially offering value opportunity for long-term investors willing to weather current volatility.

As market participants brace for what could be another turbulent week across all financial assets, Ethereum’s price action will likely remain heavily influenced by broader risk sentiment, particularly as investors assess the economic impact of escalating global trade tensions.

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Mason Drake

Mason has been covering the exciting and fast-pasted crypto space since the early days of Bitcoin. From decentralized finance to NFT trends, he provides deep analysis on where the industry is headed and what it means for investors.

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