ETH sinks below $2,000, faces period of repricing

ETH sank below $2,000 for the first time since early 2025, pressured by the negative sentiment in crypto space. ETH may be in another period of repricing based on demand, sentiment, and real network usage. 

ETH traded at $1,972.82, after a 13.4% loss for the past month. The token carries a net loss of around 6% for Q2 to date. Based on the Ethereum fear and greed index, the asset is trading with a fearful sentiment. 

The ETH market cap dominance is down to 9.43%, while BTC increased its dominance to 57.7%. ETH also remains stagnant at 0.027 BTC. 

Beyond the usual price fluctuations, ETH is testing the sentiment of crypto native users. The chain has been the technical, as well as financial backbone of DeFi. Negative price action is seen as a sign of capitulation, which may also affect fees and passive income in the ecosystem. 

What will ETH traders do next?

The recent ETH price slide already caused a $241M in long liquidations for the past 24 hours. Based on the liquidation heatmap, ETH may sink lower to around $1,950 to attack the accumulation of long positions at that level. 

The other possible scenario is a short squeeze, where the price moves to liquidate short positions around $2,100. At this point, it remains to be seen if ETH is driven by derivative traders or more fundamental factors. Derivative trading may push the price within a tight range, liquidating positions within that frame. 

ETH open interest rose to $12.5B based on Coinalyze data, suggesting recent price swings are attractive to traders. CoinGlass data, including CME and smaller exchanges, puts ETH open interest at $32.69B, recently increasing with more aggressive short positions. Spot holders are rethinking their dedication to Ethereum and the asset’s long-term potential. 

Will cheaper ETH undermine DeFi? 

The price of ETH is closely tracked, as it is the backbone of DeFi lending, liquid staking tokens, and other collaterals. Currently, over 32% of all ETH is staked, giving some of the early adopters and large holders reliable passive income. Ethereum still produces over $20M in fees, based on Token Terminal data, though validator nodes still mostly rely on block rewards.  

At the same time, ETH transaction fees are at an all-time low, somewhat diminishing payouts to stakers and node operators. Despite this, over 3.8B ETH are waiting to be staked, and only around 200K ETH are waiting to be unstaked.

DeFi protocols on ETH now hold $41.78B, down from over $91B in August 2025. A mix of weakening ETH and recent hacks further undermined trust in DeFi. The DeFi ecosystem is also switching to other networks, with Solana and Hyperliquid emerging as more active DeFi hubs. 

On Aave, loans are down to $8B, shrinking by 14% in the past month. On Ethereum as a whole, active loans are down from $20B to around $16B, as a result of the shrinking ETH price and the aftermath of the KelpDAO hack. However, DeFi has not seen a liquidation cascade, as most ETH loans are liquidatable at a much lower price.

ETH is also losing ground with mainstream investors, as ETF outflows have resumed. The recent switch of investors to the stock market also deprived crypto of liquidity.