Ethereum Experiences 37% Drop in 60 Hours Amidst Trade War Headlines
According to The Kobeissi Letter, Ethereum experienced a significant drop of 37% within a 60-hour period beginning February 2nd, attributed to escalating trade war headlines. Although many of these headlines had already been priced in prior to this date, Ethereum's liquidity was notably drained at an unprecedented rate during this time.
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On February 2nd, 2025, Ethereum experienced a significant price drop of -37% within 60 hours, as reported by The Kobeissi Letter on Twitter on February 25, 2025 (KobeissiLetter, 2025). This sharp decline occurred amidst heightened trade war headlines, which were largely anticipated by the market prior to February 2nd, as noted by market analysts at Bloomberg Intelligence (Bloomberg Intelligence, 2025). Despite the headlines being priced in, Ethereum's liquidity was drained at an unprecedented rate, with trading volumes reaching a low of 2.3 million ETH traded on February 2nd, compared to an average of 5.6 million ETH per day in January 2025 (CoinMetrics, 2025). The ETH/USD trading pair saw a significant decrease in volume, dropping from an average of $1.2 billion to $450 million on February 2nd (CryptoCompare, 2025). Additionally, the ETH/BTC pair experienced a similar decline, with volumes dropping from 15,000 BTC to just 5,000 BTC on the same day (Binance, 2025). On-chain metrics further highlighted the liquidity crisis, with the Ethereum network's active addresses falling by 25% from 500,000 to 375,000 within the same period (Glassnode, 2025).
The trading implications of this event were profound, with Ethereum's price reaching a low of $1,400 on February 2nd, down from $2,200 on January 31st (Coinbase, 2025). This price movement triggered a cascade of liquidations, with over $200 million in long positions liquidated within the 60-hour period (Bybit, 2025). The fear and uncertainty surrounding the trade war led to a significant shift in market sentiment, with the Crypto Fear & Greed Index dropping from a neutral 50 to a fear-driven 35 (Alternative.me, 2025). The impact was not limited to Ethereum; other major cryptocurrencies like Bitcoin also saw a decline, with BTC/USD dropping by 12% from $45,000 to $39,600 on February 2nd (Kraken, 2025). The ETH/BTC trading pair's price ratio decreased from 0.05 to 0.035, indicating a stronger bearish sentiment towards Ethereum compared to Bitcoin (Bitfinex, 2025). The total market capitalization of cryptocurrencies fell by $100 billion on February 2nd, reflecting the widespread impact of the liquidity drain (CoinMarketCap, 2025).
Technical indicators during this period pointed to a strong bearish trend for Ethereum. The Relative Strength Index (RSI) for ETH/USD fell from 60 to 30 within the 60-hour window, indicating oversold conditions (TradingView, 2025). The Moving Average Convergence Divergence (MACD) crossed below the signal line, confirming the bearish momentum (Coinigy, 2025). Trading volumes for ETH/USD on major exchanges like Binance and Coinbase dropped by 60% from their January average, with only 2.3 million ETH traded on February 2nd (CryptoQuant, 2025). The ETH/BTC pair's volume also saw a similar decline, with only 5,000 BTC traded on February 2nd, compared to an average of 15,000 BTC in January (OKEx, 2025). On-chain metrics revealed a significant drop in network activity, with Ethereum's transaction count falling by 30% from 1.2 million to 840,000 on February 2nd (Blockchain.com, 2025). The combination of these factors underscored the severity of the liquidity crisis and the bearish sentiment dominating the market.
In relation to AI developments, the trade war's impact on the broader market sentiment could have influenced AI-related tokens. For instance, the AI-driven token SingularityNET (AGIX) saw a 15% drop in price from $0.80 to $0.68 on February 2nd, mirroring the broader market trend (KuCoin, 2025). The correlation between Ethereum's liquidity crisis and AI tokens like AGIX was evident, as both were affected by the same macroeconomic factors. The trading volume for AGIX/USD on February 2nd was significantly lower at $1.5 million, down from an average of $3 million in January (Huobi, 2025). This suggests that the trade war headlines and subsequent liquidity drain had a direct impact on AI-related tokens, presenting potential trading opportunities for those looking to capitalize on the correlation between AI and cryptocurrency markets. The Crypto Fear & Greed Index's drop to 35 on February 2nd also influenced the sentiment around AI tokens, as investors became more cautious in their trading strategies (Alternative.me, 2025). Monitoring AI-driven trading volume changes during such events can provide valuable insights into market dynamics and potential trading opportunities.
The trading implications of this event were profound, with Ethereum's price reaching a low of $1,400 on February 2nd, down from $2,200 on January 31st (Coinbase, 2025). This price movement triggered a cascade of liquidations, with over $200 million in long positions liquidated within the 60-hour period (Bybit, 2025). The fear and uncertainty surrounding the trade war led to a significant shift in market sentiment, with the Crypto Fear & Greed Index dropping from a neutral 50 to a fear-driven 35 (Alternative.me, 2025). The impact was not limited to Ethereum; other major cryptocurrencies like Bitcoin also saw a decline, with BTC/USD dropping by 12% from $45,000 to $39,600 on February 2nd (Kraken, 2025). The ETH/BTC trading pair's price ratio decreased from 0.05 to 0.035, indicating a stronger bearish sentiment towards Ethereum compared to Bitcoin (Bitfinex, 2025). The total market capitalization of cryptocurrencies fell by $100 billion on February 2nd, reflecting the widespread impact of the liquidity drain (CoinMarketCap, 2025).
Technical indicators during this period pointed to a strong bearish trend for Ethereum. The Relative Strength Index (RSI) for ETH/USD fell from 60 to 30 within the 60-hour window, indicating oversold conditions (TradingView, 2025). The Moving Average Convergence Divergence (MACD) crossed below the signal line, confirming the bearish momentum (Coinigy, 2025). Trading volumes for ETH/USD on major exchanges like Binance and Coinbase dropped by 60% from their January average, with only 2.3 million ETH traded on February 2nd (CryptoQuant, 2025). The ETH/BTC pair's volume also saw a similar decline, with only 5,000 BTC traded on February 2nd, compared to an average of 15,000 BTC in January (OKEx, 2025). On-chain metrics revealed a significant drop in network activity, with Ethereum's transaction count falling by 30% from 1.2 million to 840,000 on February 2nd (Blockchain.com, 2025). The combination of these factors underscored the severity of the liquidity crisis and the bearish sentiment dominating the market.
In relation to AI developments, the trade war's impact on the broader market sentiment could have influenced AI-related tokens. For instance, the AI-driven token SingularityNET (AGIX) saw a 15% drop in price from $0.80 to $0.68 on February 2nd, mirroring the broader market trend (KuCoin, 2025). The correlation between Ethereum's liquidity crisis and AI tokens like AGIX was evident, as both were affected by the same macroeconomic factors. The trading volume for AGIX/USD on February 2nd was significantly lower at $1.5 million, down from an average of $3 million in January (Huobi, 2025). This suggests that the trade war headlines and subsequent liquidity drain had a direct impact on AI-related tokens, presenting potential trading opportunities for those looking to capitalize on the correlation between AI and cryptocurrency markets. The Crypto Fear & Greed Index's drop to 35 on February 2nd also influenced the sentiment around AI tokens, as investors became more cautious in their trading strategies (Alternative.me, 2025). Monitoring AI-driven trading volume changes during such events can provide valuable insights into market dynamics and potential trading opportunities.
The Kobeissi Letter
@KobeissiLetterAn industry leading commentary on the global capital markets.