ETH Hits 13-Month Low As Liquidations Pile Up: Is $1.4K Next?

Ether ( $ETH ) plunged to a 13-month low of $1,540 on Friday, dragged down by a sea of red across the broader crypto market. With derivatives metrics flashing red and a freshly discovered bug in the ZCash blockchain spooking investors, traders are bracing for an even uglier leg down. The 67% drawdown from ETH's August 2025 all-time high no longer feels quite so unbelievable.

The ETH perpetual futures annualized funding rate flipped negative on Friday — a clear sign that shorts are now calling the shots. Bulls, meanwhile, are nursing wounds after $1.28 billion in leveraged longs got vaporized over five days. Confidence, in classic crypto fashion, is in short supply.

Demand for downside protection spiked as Deribit's ETH options put-to-call premium hit 3.7x on Friday. The ratio has consistently shown excess demand for put (sell) options since Monday, suggesting that even the optimists have quietly started hedging. Low conviction among holders is, conveniently, giving bears a wide-open lane.

The latest leg down also coincides with a steep drop in Ethereum network Total Value Locked (TVL), now at its lowest level since February 2024. Smaller deposits in DApps translate to less fee revenue and weaker demand for ETH as gas — a tidy little negative feedback loop.

Some of Ethereum's top DApps saw brutal TVL contractions, including Spark (-50%), Ether.fi (-49%), EigenCloud (-41%), and KernelDAO (-39%). Part of the exodus can be traced back to a critical vulnerability allowing unlimited ZEC minting in the largest ZCash zero-knowledge pool. The bug, discovered on May 29 using Anthropic's Opus 4.8 AI model, had quietly lurked in the codebase since 2022.

The fact that this ZCash bug survived undetected for years has traders wondering what else is hiding in plain sight. With AI now sniffing out smart contract flaws at a steady clip, investors are jumpy — especially after April's crypto hacks racked up $630 million in losses. KelpDAO's $293 million hack and Drift Protocol's $280 million exploit made up 82% of the damage across 25 protocols, spreading panic across multiple networks including Ethereum, Solana, Base, BNB Chain, Sui, and PulseChain.

Only 30% of ETH supply is currently in profit relative to when those coins last moved — a setup that has appeared only a handful of times in history. The most recent comparable instance was the mid-March 2020 COVID crash, and before that, mid-December 2019, which preceded a 118% rally within 60 days. Historically bullish, sure, but not exactly a comfort blanket right now.

With over $500 million in leveraged ETH long positions liquidated in the past 48 hours, a relief bounce looks unlikely. The largest Ethereum treasury firm, Bitmine (BMNR US), is sitting on an unprecedented $10.5 billion unrealized loss while holding 4.5% of the entire ETH supply. If confidence keeps deteriorating in the wake of multiple DeFi hacks and the inflationary bug in ZCash's shielded protocol, ETH could slide further below $1,550.

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