Ethereum Plunges 10% in $19B Crypto Liquidation Storm

Friday’s crypto market collapse unleashed the worst 24-hour period on record, with Ethereum bearing the brunt of a $19 billion liquidation storm that dwarfed previous market catastrophes. The decentralized powerhouse fueling DeFi and NFTs cratered over 10% from its peak, hitting a low of $3,750 as risk assets across global markets reacted to President Trump’s escalating tariff threats on Chinese imports. The scale of destruction was staggering—this single-day liquidation event measured nine times larger than February’s entire market wipeout and 19 times the magnitude of the FTX collapse that previously defined crypto market trauma.

The Grayscale Ethereum Mini Trust ETF, trading under NYSEARCA:ETH, mirrored the underlying asset’s volatility, with shares plunging to $36.72 during the height of the selloff before recovering slightly to $38.29. Despite the dramatic intraday swings, the fund’s year-to-date performance remains positive at 17.66%, highlighting its relative stability compared to direct ETH exposure. The fund’s low 0.15% expense ratio and institutional-grade structure provided some insulation against the broader market panic that gripped cryptocurrency investors worldwide.

Excessive leverage transformed a significant market correction into a full-scale liquidation cascade, with margin calls reaching unprecedented levels across trading platforms. The mechanics were brutal: a 10% drop in Ethereum’s price completely wiped out traders holding 10x long positions, while platforms recorded 1.6 million margin calls within hours—a staggering 88% of which originated from ultra-risky 100x bets. This leverage-fueled frenzy created a self-reinforcing downward spiral as forced liquidations triggered further price declines.

Ethereum’s sophisticated DeFi ecosystem, typically seen as a competitive advantage, became an amplifier of agony during the crash. Yield chasers participating in lending pools faced smart contract-triggered liquidations of billions in wrapped assets once ETH breached the $3,500 threshold. The automated nature of these liquidations removed human discretion from the process, creating a waterfall of selling pressure that overwhelmed market defenses. In the aftermath, capital flows shifted decisively toward Bitcoin as investors sought perceived safety in the original cryptocurrency.

While the broader ETH ETF complex suffered massive outflows totaling $428.52 million, with flagship ETHE alone losing $20.99 million on Monday, the Grayscale Ethereum Mini Trust ETF staged a remarkable counter-trend performance. The fund attracted $11.75 million in weekly inflows, boosting its total assets to $1.53 billion and demonstrating institutional confidence in its unique value proposition. This divergence highlights how investors are increasingly discriminating between different Ethereum exposure vehicles based on cost structure and additional benefits.

The Mini Trust’s resilience stems from its dual advantage of low fees and integrated staking rewards. Grayscale’s staking of over 300,000 ETH injects approximately $150 million into the proof-of-stake ecosystem, generating 4%+ yields for holders without the technical complexities of node operation. This staking yield provides a crucial buffer during market downturns, offering investors ongoing returns even as prices fluctuate. With 2025 spot inflows projected at $14.48 billion before the recent dip, institutions appear to be viewing the current weakness as a strategic buying opportunity rather than a reason for panic.

Trading desks have shifted into full defensive mode, with professionals loading up on hedges reminiscent of the 2022 bear market that saw Ethereum plunge 80% over a grueling two-year period. The parallel to that challenging period is unmistakable, testing investor nerves and risk tolerance across the crypto ecosystem. However, historical patterns suggest reasons for cautious optimism about Ethereum’s recovery potential.

Ethereum’s fundamental upgrades provide a solid foundation for eventual recovery. The 2022 Merge transitioned the network to energy-saving proof-of-stake, while the 2024 Dencun upgrade dramatically reduced transaction fees and enhanced scalability. These technological improvements didn’t merely address technical limitations—they drove massive adoption across DeFi, NFTs, and broader blockchain applications. The Grayscale Ethereum Mini Trust ETF’s combination of low 0.15% fees and 4%+ staking yields positions it to weather any potential crypto winter, offering investors exposure to Ethereum’s long-term potential while mitigating short-term volatility through its structural advantages.