The recent Ethereum price market crash has put Wall Street veteran Tom Lee’s ambitious $1.3 billion ETH Treasury investment under severe pressure as whales and institutional funds begin to retreat from the world’s second-largest cryptocurrency asset.
Related Read: Here’s why Bitcoin price is plummeting OG is selling.
Ethereum’s Price Falling and Bitmine’s Increasing Losses
Ethereum fell more than 20% in two days, falling below $3,300 and burning more than $1 billion in leveraged positions. The correction puts ETH down about 30% from its August high, hitting its weakest level since mid-July.
According to 10x Research, Lee’s company, Bitmine Immersion Technologies Inc., which acquired 3.4 million ETH at an average price of $3,909, is now facing paper losses of over $1.3 billion.
Bitmine, backed by billionaire Peter Thiel, has adopted a Bitcoin-style corporate finance model, but its funds are now “fully invested and stressed,” leaving little room for defensive moves.
Bitmine’s market capitalization to NAV ratio plummeted from 5.6 in July to 1.2, and its stock price fell 70% from its peak, reflecting a rapid reassessment of the financial valuation of cryptocurrencies.
Another Ethereum holding company, ETHZilla, has already liquidated $40 million worth of ETH to restore its balance sheet, indicating increasing corporate capitulation across the sector.
ETH's price trends to the downside with small profits on the daily chart. Source: ETHUSD on Tradingview
Whales retreat due to increased clearing
On-chain data from Arkham Intelligence shows that a large Ethereum whale recently offloaded 55.70 ETH ($19.56 million) to Binance, causing a loss of $2.15 million. This move amplified selling pressure amid weak liquidity. ETH’s market capitalization has now fallen to around $400 billion, with the token down 17% on a weekly basis.
Technical indicators paint a cautious picture. ETH has fallen below its 50-day moving average ($4,094) and RSI is near 31, indicating a near oversold condition but no confirmed reversal. Analysts warn that failure to hold the $3,300 support could trigger a larger correction in the $3,000-$2,700 area.
Institutional demand decreases but basics remain the same
After attracting more than $9 billion in ETF inflows during the summer rally, Ethereum products have seen outflows of $850 million and futures open interest has fallen by $16 billion. Retail enthusiasm has also waned, with Google search interest in Ethereum currently only 13% of its annual high.
Despite the recession, Ethereum’s network fundamentals remain strong. It continues to process the highest on-chain value among smart contract platforms, and the Layer 2 upgrade proposed by Vitalik Buterin aims to reduce roll-up withdrawal times to 1-2 days, potentially driving adoption.
Related Read: Top Crypto Exchange Expands into Latin America with Entry into Argentine and Brazilian Markets.
But for now, Lee’s high-risk Ethereum bet stands as a cautionary tale of overheated optimism colliding with cool markets, leaving investors wondering if Bitmine’s multibillion-dollar losses are the beginning or bottom of Ethereum’s latest cycle.
Cover image by ChatGPT, ETHUSD chart by Tradingview
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