As of February 2, 2026, Ethereum (ETH) trades around $2,253, following a sharp sell-off that erased a large share of January’s gains. The market recorded an intraday range between approximately $2,163 and $2,434, reflecting intense volatility across major crypto exchanges. Traders report a double-digit percentage decline (around 10%) in a single session, driven mainly by forced liquidations and a broad risk-off mood in global markets.
This sudden move shocked short-term traders and reminded investors that Ethereum still reacts strongly to liquidity events, even in an era of institutional participation and exchange-traded products.
What triggered today’s drop
The current decline links directly to a wave of liquidations across the crypto derivatives market. Estimates place total liquidations near $2 billion, with Ethereum among the hardest-hit assets. When leveraged positions unwind at scale, automated selling accelerates price declines and feeds a feedback loop of fear and margin calls.
Several factors combined to intensify the move:
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High leverage in the system
Many traders entered long positions after Ethereum’s January rally. When prices slipped below key support zones, liquidation engines forced rapid selling. -
Weak institutional inflows
Spot Ether exchange-traded products showed slower inflows compared with previous weeks. Reduced demand from institutional buyers removed an important price cushion. -
Macro risk sentiment
Global markets adopted a defensive posture as investors reacted to uncertainty in interest-rate expectations and equity performance. Crypto assets followed the same risk-off pattern.
Ethereum fell more sharply than Bitcoin during this episode, which suggests that leverage concentration in ETH derivatives amplified the downside move.
Supply dynamics: why Ethereum reacts so sharply
Ethereum’s market structure now looks very different from earlier cycles. A growing share of the total ETH supply remains locked in long-term holdings:
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Staking contracts continue to absorb millions of ETH.
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Institutional custody accounts hold large balances for ETFs and corporate portfolios.
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Long-term wallets show limited selling behavior during routine market swings.
This reduced “tradable supply” creates a paradox. On one hand, it supports higher prices during periods of strong demand. On the other hand, it increases price sensitivity during sell-offs. When only a smaller pool of ETH remains liquid on exchanges, even modest selling pressure can move the price dramatically.
Today’s decline highlights that effect. Liquidations pushed a concentrated volume of ETH into a thinner trading environment, which magnified volatility.
Institutional flows and tokenization narrative
Ethereum’s long-term narrative still centers on institutional adoption and tokenization of real-world assets. Asset managers and banks increasingly view Ethereum as the main settlement layer for tokenized bonds, funds, and financial instruments.
During 2025, this theme helped lift medium- and long-term price forecasts. Analysts pointed to:
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Growth in on-chain treasury products
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Rising staking yields combined with deflationary token economics
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Expansion of Ethereum-based financial infrastructure
However, short-term price action depends heavily on flows. When ETF and institutional demand pauses, Ethereum loses a critical source of support. Today’s decline reflects that reality: long-term optimism did not prevent a sharp short-term correction.
On-chain signals: mixed messages
On-chain data paints a divided picture:
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Whale accumulation continues in select wallets, suggesting confidence among some large holders.
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Exchange inflows increased during the sell-off, which signals short-term selling pressure from traders seeking liquidity.
These two forces now compete. Accumulation hints at belief in Ethereum’s structural value, while exchange inflows confirm fear and profit-taking in the short term. This tension often produces sharp price swings and false breakouts.
Technical perspective
From a technical standpoint, analysts previously identified support near $2,690 and resistance around $3,340. Ethereum now trades well below those levels, which shows how quickly market structure can change after a liquidation cascade.
Short-term charts now display:
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Broken support zones
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Elevated trading volume
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Wide intraday candles that reflect emotional trading
This environment favors experienced traders but punishes poorly managed leverage. Long-term investors typically focus less on these levels and more on adoption metrics and supply trends.
Why this matters for traders and investors
For traders
Ethereum’s current volatility creates opportunity but also danger. Rapid price movement can deliver profits, but it also increases the risk of slippage and liquidation. Discipline and position sizing matter more than prediction in this phase.
For investors
Investors with longer time horizons must separate noise from structure. The underlying themes remain:
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Reduced liquid supply
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Growing institutional integration
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Expanding tokenization use cases
Yet price can still fall sharply when liquidity conditions tighten. Today’s move does not invalidate the broader story, but it shows how fragile short-term sentiment can become.
Analyst sentiment: divided but cautious
Market commentary now splits into two camps:
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Short-term caution:
Some analysts warn of a potential “bull trap,” where quick rebounds lure buyers before another decline. They advise waiting for confirmation of stability in flows and derivatives markets. -
Medium-term optimism:
Others maintain constructive outlooks over several quarters, citing Ethereum’s role in tokenization and decentralized finance infrastructure. They argue that temporary drawdowns offer accumulation opportunities rather than structural breakdowns.
Prominent voices in the Ethereum ecosystem also urge moderation in expectations, reminding the market that hype can overshoot real adoption.
Key risks to watch next
Investors and traders should monitor four critical areas:
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ETF and institutional flows
Renewed inflows could stabilize prices. Continued outflows could extend the correction. -
Derivatives and liquidation data
High open interest combined with falling prices raises the probability of further forced selling. -
On-chain supply changes
Large transfers to exchanges or major staking shifts can signal new directional moves. -
Macro conditions
Broader equity and bond market stress often spills into crypto markets, increasing downside risk.
Bottom line
On February 2, 2026, Ethereum trades near $2,253 after a violent liquidation-driven sell-off that wiped out recent gains. About $2 billion in liquidations and weaker institutional flows triggered the move, while reduced tradable supply amplified volatility.
The short-term outlook remains uncertain and highly sensitive to flows and macro sentiment. The medium-term story—anchored in staking economics, tokenization, and institutional adoption—still stands intact.
Ethereum now sits at a crossroads. Traders face a high-risk, high-volatility environment. Long-term investors must decide whether this decline represents noise within a larger growth narrative or an early warning of deeper weakness. In the coming days, flow data and market stability will determine which path dominates.
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