Eastern Eight Zone time this week, Ethereum (ETH) has broken down through the key price level of $2000, with a 24-hour decline reported by some data sources at approximately 3.7%-3.9%. This price movement, combined with changes in on-chain indicators, has sparked a new round of debate in the market about "whether we are close to the cycle bottom." In particular, data indicates that Ethereum's MVRV Z-Score has dropped to about -0.42, suggesting that many holders are in a state of unrealized losses. Some view this as a "re-emergence of value undervaluation," while others interpret it as a "desperate phase in the latter half of the bear market." The psychological barrier of $2000 has become a focal point for panic selling and the long-term "bottom-fishing" narrative, once again placing Ethereum at the center of an emotional storm.
Key Support Lost: Bullish and Bearish Sentiment Instantly Reversed
● Key Level Tug-of-War Broken: Around the $2000 mark, ETH had previously experienced multiple rounds of tug-of-war, with prices repeatedly fluctuating within this range, accompanied by alternating expansions and contractions in trading volume, creating a strong psychological expectation of "key support." Ultimately, following a series of continuous sell orders that pressured the price downward, the K-line entity effectively broke below the $2000 line, with the intraday pullback showing a steeper decline on the chart, and the market's center of gravity clearly shifting downward, with short-term moving averages beginning to turn downwards.
● Decline Data and Uncertainty: According to a single market data source, around the time of breaking below $2000, Ethereum's 24-hour decline was roughly in the 3.7%-3.9% range. This figure is not an extreme drop among mainstream assets, but it is sufficient to amplify emotional effects against the backdrop of losing a key price level. It is important to emphasize that current data on declines and trading structure largely relies on individual data providers, and there may still be discrepancies between different exchanges and aggregation platforms; the precise numbers should not be mechanically exaggerated.
● Emotion After Psychological Anchor is Breached: For the community and derivatives traders, "$2000" has long been more than just a technical level; it is a psychological anchor that has run through months of narrative. After this price level was broken, social media sentiment clearly shifted, with some short-term funds viewing it as a trend reversal signal, beginning to discuss "whether we are entering a new downward channel"; meanwhile, in the futures and perpetual contract markets, discussions about bulls actively reducing positions and passive liquidations heated up, with screenshots of trading interfaces and rumors of liquidation curves rapidly spreading in the community, intensifying the tense atmosphere.
● Rumors About Lowest Prices and Liquidations: Surrounding this breakdown, there were reports that Ethereum briefly dropped to lower price levels during trading, accompanied by a large number of long positions being liquidated, triggering a panic narrative of "waterfall-style liquidations." However, the specific numbers regarding the lowest transaction prices and liquidation scales are still pending verification, and different channels provide inconsistent accounts. What can be confirmed is that there is indeed market concern about "large liquidations" and "extreme low transactions," but these rumors currently resemble a magnifying glass for emotional amplification rather than fully verified conclusions.
MVRV Turns Negative: Historical Bottom
● Unrealized Losses Amplify Pain: On-chain analysis data shows that Ethereum's MVRV Z-Score has dropped to about -0.42, indicating a discount range of the current market price relative to historical on-chain holding costs. In simple terms, this means a significant number of on-chain holders have entered a state of unrealized losses, and every downward price movement genuinely diminishes the paper profits of past entry funds. This widespread unrealized loss is not immediately visible at the price level but constitutes a kind of "underlying pressure" in the on-chain data.
● Shadows of Historical Bottoms: Looking back at previous major cycles, when Ethereum's MVRV Z-Score falls close to or below zero, it often corresponds to a picture of market sentiment being relatively low and prices nearing a phase bottom. At that time, the community was filled with discussions about "on-chain value being severely undervalued," often followed by a period of sideways movement and slow recovery. However, this historical experience only serves as a reference for the current situation and does not mean that the current Z-Score falling into negative territory necessarily signals that "the bottom has arrived."
● Single Source and Indicator Limitations: It is important to be cautious that the current data regarding "MVRV Z-Score around -0.42" also primarily comes from a single analysis channel; different on-chain data platforms may use different sampling and calculation methods, and the specific values themselves may have a certain margin of error. Additionally, MVRV is just one of many on-chain indicators, and the historical cost estimates and on-chain circulation assumptions it relies on come with preconditions. Any use of it as a "mechanical buy point" or "absolute bottom signal" will amplify errors in reality.
● Weak Technicals and Divergence on Value Undervaluation: This directly leads to the current cognitive dissonance—one side emphasizes the continued weakening of daily and weekly structures, believing that after breaking below $2000, there is a vacuum of support below, and the price path remains weak; the other side focuses on on-chain indicators like MVRV, arguing that "from a value perspective, we are close to historical lows," and the current price resembles a position where long-term chips can be gradually accumulated. The perspectives of "technical weakness" and "on-chain nearing undervaluation" have misaligned on the same chart.
Funds No Longer Only Look at Spot: Derivatives
● Structural Shift to Leverage and Derivatives: According to researcher Joel John, since the market's phase bottom in 2023, the proportion of perpetual contracts in DeFi protocol revenues has roughly quadrupled. Behind this data is a profound change in funding structure: compared to simply holding spot, an increasing amount of liquidity is beginning to express views, earn fee shares, or generate market-making profits through leverage and derivatives. The violent fluctuations in Ethereum's price are, in a sense, continuously contributing to this type of protocol's "trading tax revenue."
● On-Chain Income Expansion Under Price Pressure: Even during periods when ETH's spot price is under pressure and daily patterns are weakening, some DeFi protocols related to perpetual contracts and leveraged products can still maintain or even increase on-chain income in terms of fees, costs, and liquidations. This means that certain "cash flow modules" within the Ethereum ecosystem have not retreated in sync with prices; rather, they have demonstrated stronger capital-absorbing capabilities in a high-volatility environment, which contradicts many investors' intuition that "price drops = ecological decline."
● Interaction of High Volatility and Capital Migration: When spot price volatility intensifies and direction is unclear, some funds may choose to shift towards leveraged and yield-generating products, hoping to hedge or amplify profit expectations through higher frequency and more complex strategies. Tools like perpetual contracts, LP market-making, and structured products have become the main carriers for this risk transfer. The result is that, on the surface, prices seem to be "plummeting," but the underlying on-chain trading and liquidation activities are becoming increasingly dense, with derivatives-related protocols experiencing a reverse amplification in revenue.
● Activity and Price Discrepancy: These data collectively point to one conclusion: Ethereum-related on-chain activity has not been "halved" with the price pullback. On the contrary, in certain subfields, activity frequency and protocol revenue have even diverged from spot price trends. For traders who only focus on K-lines, this discrepancy may be overlooked, but for those attempting to assess mid- to long-term value, it suggests that the ecosystem is still operational at a deeper level, and the market has merely shifted more risk and reward dynamics to the leverage and derivatives stage.
New Narratives like FUSD: On-Chain Beauty
● The Story of "On-Chain Dollar + Real Assets": While Ethereum's price fluctuates, new narratives are brewing on other chains. Fosun Wealth Holdings' FinChain has chosen to launch FUSD on Avalanche, supported by real-world assets (RWA), attempting to construct a combination story of "on-chain dollar + real assets." Such products enhance the credit backing of "dollars" with real assets on one hand, while on the other, they cater to the trading and yield demands of crypto natives through on-chain issuance and circulation, providing options that differ from traditional stablecoins and single public chain tokens.
● RWA and Stablecoin Track Diversion Effect: As RWA and various dollar-denominated assets spread across multiple public chains, the attention and liquidity of funds are being redistributed. Some capital that originally chased DeFi yields and narrative dividends solely on Ethereum can now choose to participate in RWA projects or new dollar assets in other ecosystems. This cross-chain and cross-track migration does not necessarily mean a direct bearish outlook on ETH, but it objectively dilutes Ethereum's monopoly position in "main narrative" and "funding focus."
● Evidence of On-Chain Activity Diffusion: Similar to FUSD, developments like HTX opening UP deposit services and BTTC staking functionality integrated into TokenPocket wallet, although not occurring on Ethereum's mainnet itself, point to a trend—on-chain activity is spreading across multiple chains and tools. We will not delve into specific timelines and functional details here, but rather view it as evidence that funding and user behavior are no longer solely reliant on a few leading public chains, which intensifies competition and makes the emotional fluctuations of a single asset harder to quickly repair based solely on internal narratives.
● Multi-Chain Diversification and Emotional Resilience Weakening: As funds are dispersed across multiple public chains and various tracks, the originally concentrated "elastic liquidity pool" on Ethereum is being fragmented. When prices drop, the idle liquidity that can quickly flow back to bottom-fishing is no longer as concentrated as it was in earlier cycles, which may reduce both the strength and speed of rebounds when ETH encounters a loss of key support. In other words, the prosperity of multi-chain and multi-narrative enhances the overall resilience of the crypto market while also weakening Ethereum's single asset's "quick self-healing ability" in terms of sentiment.
Vision for the AGI Era: Long-Term Perspective
● Infrastructure Logic of the AGI Era: Multicoin Capital partner Kyle Samani has suggested that even in an era where general artificial intelligence (AGI) drives the marginal cost of nearly everything close to zero, the demand for crypto infrastructure will still exist. His logic is that in a highly automated and intelligent world, trusted settlement, cross-entity collaboration, and the verification and exchange of value and data will still require neutral underlying systems, and public chains and the financial and application layer protocols built on them are candidates for such infrastructure.
● Short-Term Volatility and Long-Term Demand Misalignment: Placing this viewpoint alongside the current reality of ETH breaking below $2000 and a nearly 4% intraday decline creates a stark contrast. On one side are the continuously refreshing red K-lines and stop-loss feedback, while on the other side is the long-term narrative that the future AGI world will still rely on on-chain settlement and smart contracts. Short-term price volatility constantly tests traders' risk tolerance thresholds, while long-term demand expectations are more embedded in technical roadmaps, ecological expansion, and macro narratives, with a misalignment in their time scales.
● Ethereum's Role in the Eyes of Long-Term Participants: For those who still maintain a long-term perspective, Ethereum resembles a global settlement layer and open financial operating system, rather than merely a speculative chip. They focus on Ethereum's integration in DeFi, on-chain asset issuance, cross-chain interoperability, and future connections with AI, RWA, and other fields, rather than just single daily or weekly price fluctuations. For this type of capital, the MVRV Z-Score turning negative and the price retreating to historical cost levels feel more like "a range for gradually positioning long-term holdings," rather than "a precursor to the end of the trend."
● Confrontation Between Panic Selling and Gradual Buying: The current market picture thus presents a complex game: on one end are short-term funds choosing to panic sell or forcibly liquidate after seeing key price levels lost and technical patterns weaken; on the other end are slow funds choosing to gradually accumulate during pullbacks based on long-term narratives and on-chain valuation perspectives. Both sides have made diametrically opposed decisions within the same time window, and the price has become the explicit result of this game—carrying both emotional release and reflecting bets on different time dimensions for the future.
Bottom Debate Unresolved: Price Noise and
The current round of breaking below $2000 has pulled Ethereum into a clear opposing framework: the weakening of technicals versus the value undervaluation reflected by the negative MVRV, forming a sharp confrontation of "price pessimism vs value optimism." On one hand, the K-line structure and the loss of key support have made the short-term bearish signals more pronounced; on the other hand, on-chain data shows that a large number of holders have fallen into the unrealized loss range, providing ammunition for the debate on "whether we are close to a phase bottom."
It is important to repeatedly emphasize that many of the key numbers surrounding this round of market activity—including the precise value of the 24-hour decline, the specific level of the MVRV Z-Score, the intraday low price, and the scale of liquidations—still come from a single data source or are pending verification. In such an information environment, treating any single indicator or rumor as "absolute truth" and betting all in one direction seems overly risky. A more reasonable approach is to acknowledge the imperfection and incompleteness of the data, viewing it as a reference for building understanding rather than a "holy grail" to be directly converted into trading instructions.
From a longer time frame perspective, Ethereum's price may continue to experience violent fluctuations driven by emotions in the coming period, repeatedly testing the market's patience and confidence. However, what ultimately determines whether this public chain can regain pricing power in the next cycle is still its real-world implementation and penetration in DeFi, RWA, and even the AGI era: whether the settlement layer is still widely adopted, whether developers continue to build on it, and whether protocols and applications can accumulate sustainable on-chain revenue and users.
Therefore, rather than simply summarizing the current situation as "the end of the bull market" or "a perfect bottom-fishing opportunity," it is better to view it as a multiple-choice question about time dimensions: whether to define the value of this asset using daily lines and liquidation curves, or to attempt to understand its position in the future economic system from a longer cycle and infrastructure perspective. The answer will not be revealed in a single K-line but will gradually manifest in on-chain data and real-world use cases after countless fluctuations.
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