Ether price crashes to a 13-month low of $1,540, reflecting a broader downturn in the cryptocurrency market. This significant decline follows a critical vulnerability discovered in Zcash and Bitcoin’s dip below the $60,000 mark. Traders are now bracing for potentially deeper corrections as bearish sentiment grips the market, fueled by weakened derivatives metrics and heightened risk concerns.
The immediate catalyst for Ethereum’s sharp descent appears to be a confluence of market-wide fear and specific technical concerns. Data from Laevitas shows the Ether futures annualized funding rate flipped negative on Friday, a clear indication of increased demand for short positions. Despite ETH trading a staggering 67% below its August 2025 all-time high, investor confidence has been severely eroded, evidenced by $1.28 billion in leveraged long liquidations over just five days.
Derivatives Metrics Signal Bearish Dominance
Further compounding the bearish outlook, demand for downside protection has surged. The Deribit ETH options put-to-call premium spiked to 3.7 times on Friday, an indicator that has consistently shown an overwhelming preference for put (sell) options since Monday. This sustained demand for bearish bets underscores a pervasive lack of conviction among holders, creating an environment where bears can easily dictate market direction.
“The cascading liquidations of leveraged ETH long positions indicate a significant capitulation event, making a swift relief bounce unlikely in the near term.”
Why Ethereum’s TVL Contraction Matters
The severe contraction in the Ethereum network’s Total Value Locked (TVL) to its lowest point since February 2024 has further exacerbated negative trader sentiment. A reduction in deposits within decentralized applications (DApps) typically translates to lower ecosystem revenue, which in turn diminishes demand for ETH usage in smart contracts. Several of Ethereum’s leading DApps have experienced significant TVL contractions, including Spark (-50%), Ether.fi (-49%), EigenCloud (-41%), and KernelDAO (-39%).
A major contributing factor to this exodus from smart contracts is the critical vulnerability found in the Zcash blockchain. Discovered on May 29 by Anthropic’s Opus 4.8 AI model, this bug allowed for unlimited ZEC minting within Zcash’s largest zero-knowledge pool. The fact that this flaw had gone undetected since 2022 has sparked fears of contagion, leading investors to question the security of other blockchains and smart contracts. This heightened vigilance comes after cryptocurrency hacks amounted to $630 million in April alone, with major incidents like KelpDAO’s $293 million hack and Drift Protocol’s $280 million exploit accounting for 82% of monthly losses across 25 protocols. These hacks, spanning networks including Ethereum, Solana, Base, BNB Chain, Sui, and PulseChain, have sent ripples of panic across the decentralized finance (DeFi) industry, intensifying concerns about the security of digital assets.
Ether Price Crashes: Is $1.4K the Next Target?
Currently, only 30% of the ETH supply remains profitable relative to when those coins were last moved. This rare market condition has historically preceded significant price movements. For context, similar setups were observed during the mid-March 2020 COVID crash and mid-December 2019, the latter preceding a 118% rally within 60 days. However, with over $500 million in leveraged ETH long positions liquidated in just 48 hours, immediate signs of a relief bounce are absent. The largest Ethereum treasury firm, Bitmine (BMNR US), is reportedly sitting on an unprecedented $10.5 billion in unrealized losses, holding a substantial 4.5% of the entire ETH supply.
Given the deteriorating investor confidence following widespread DeFi hacks and the inflationary bug in the shielded Zcash protocol, the Ether price crashes could continue. A slide further below the $1,550 mark appears increasingly plausible, with some analysts eyeing $1,400 as the next critical support level. The confluence of technical weakness, security concerns, and significant institutional losses paints a challenging picture for Ethereum in the short to medium term.
