Brothers trading ETH, pay attention! Bad news is coming from the U.S. stock market before trading hours—Ethereum concept stocks are plummeting. iShares Ethereum Trust ETF (which tracks ETH price) fell 4.8%, BTCS (a publicly traded crypto mining company) fell 2.9%, and BitMine (an ETH mining equipment company) fell 4.4%. Many people are worried and asking, 'Is ETH going to drop too?' Don’t panic, first understand: is it that 'ETH itself is failing,' or is it 'the U.S. stock market sentiment dragging it down?' Three key signals can help you judge, along with response strategies. Don’t let the correlated market cut your profits!
One, let's first break down the truth behind the drop: it's not that ETH is failing, it's a 'double whammy of the U.S. stock market + short-term sentiment'.
Many people equate 'the drop in ETH concept stocks' with 'ETH must drop'—the two are not the same. This time, the plunge in concept stocks is primarily due to two external factors and has nothing to do with the fundamentals of ETH itself:
1. U.S. stock market overall 'sentiment is lacking,' leading concept stocks to bear the brunt.
Data before trading shows that all three major U.S. indices' futures are down: Dow futures fell 0.6%, Nasdaq futures fell 1.2%, and S&P 500 futures fell 0.8%—the overall sentiment in the U.S. stock market is poor, leading funds to withdraw from 'high-risk sectors' (like crypto concept stocks and tech stocks) to buy treasury bonds and gold for safety. Ethereum concept stocks, being a part of the 'crypto sector,' will naturally be dragged down along with them. It’s like 'when the market falls, new energy stocks fall too.' This is not an individual stock issue but a market environment issue.
I checked the holdings data for the iShares Ethereum Trust ETF: the number of ETH it holds has not decreased recently, still at 125,000 (valued at about $610 million). This drop is due to 'U.S. stock investors panicking and selling ETF shares,' not because the ETF is selling ETH—there hasn’t been a large-scale sell-off of ETH on-chain, and the balance of ETH on exchanges continues to decrease (down 50,000 in 48 hours), indicating that ETH's supply and demand fundamentals are still intact.
2. Concept stocks 'short-term profit-taking' are unrelated to ETH trends.
Ethereum concept stocks have actually increased quite a bit from the beginning of August until now: iShares ETF rose 18%, BTCS rose 25%, BitMine rose 30%. The current drop of 4%-5% is just 'normal profit-taking'—just like when you buy a stock that has risen 20%, you might want to sell a portion. This is not directly related to the actual price trend of ETH.
For instance, BTCS, whose business involves 'ETH mining + crypto investments', has not seen an increase in mining difficulty recently, and the prices of mining machines are stable. The company's fundamentals are unchanged; this drop is merely due to 'short-term speculative investors fleeing' and not because the company is failing. Crypto analyst Old Zhou interpreted it for me: 'The linkage between concept stocks and ETH is only 30%; they follow U.S. market sentiment more. Last time when the U.S. market dropped, concept stocks fell 5%, but ETH didn’t drop and instead increased by 2%. Don’t tie the two together rigidly.'
Two, key judgment: Will ETH follow the drop? Look at three signals; if they are not bad, there’s no need to panic.
What’s most concerning now is 'Will ETH be affected?' Actually, just looking at three signals is enough; if they are not bad, there’s no need to panic; if they turn bad, then consider stop-loss:
1. The price of ETH itself: the $4800 support has not been broken, and the short-term trend is still intact.
As of the release, the ETH price is $4820. Although it has dropped 1.2% from yesterday's $4880, it is still above the $4800 support level (where the 20-day moving average is), and there hasn’t been a significant drop in volume—hourly trading volume is only $3.5 billion, down 20% from yesterday, indicating 'there isn’t much selling pressure.' It’s not a real drop; it’s just being dragged down by concept stock sentiment.
Last time when iShares ETF dropped 5%, ETH also fell from $4700 to $4650 but did not break the $4600 support. It later increased back to $4800. This situation is similar; as long as it doesn't break $4750 (strong support), it is still a 'small pullback in an upward trend.'
2. Institutional funds: ETH spot ETF is still experiencing net inflows; big funds haven’t fled.
The latest data from the U.S. ETH spot ETF shows: there was a net inflow of $120 million yesterday, although less than the $300 million from last week, it is still a positive inflow—institutions are still buying ETH and have not withdrawn due to the drop in concept stocks. Institutions understand ETH's value better than retail investors. Their continued investment indicates that ETH's long-term trend is still intact.
For example, Grayscale's ETH trust has recently increased its holdings from 350,000 to 355,000, and is still accumulating; the ETH balance in Coinbase's institutional wallet has not decreased, but instead has increased by 20,000. These big funds' actions reflect the true trend of ETH better than the short-term fluctuations of concept stocks.
3. On-chain activity: ETH transfers and staking have not decreased; the ecosystem is still active.
On-chain data for ETH shows: 1.2 million ETH transfers in the last 24 hours, which is about the same as yesterday; the amount staked is still increasing, now exceeding 30.5 million ETH staked (valued at about $15 billion), which is 100,000 more than last week—this indicates that the ETH ecosystem is still active, not that 'no one is using it.' A vibrant ecosystem provides long-term price support.
For instance, in the DeFi sector, the TVL (Total Value Locked) on ETH is still at $12 billion, which hasn’t decreased; the staking volume in the RWA sector is also increasing. These have nothing to do with the drop in concept stocks; they reflect ETH's own 'hard strength.'
Three, what should be done now? E guards can choose between two types of operations, don’t rush in recklessly.
Whether you are 'holding ETH' or 'want to buy the dip', don’t be misled by concept stocks, stick to your strategy:
1. For E guards holding positions: set a stop-loss at $4750, don’t panic sell or hold on stubbornly.
If you entered 'below $4700' (with a low cost): don't sell! Set a stop-loss at $4750 (sell only if it breaks strong support), your unrealized loss is not much now, holding on could likely result in a rebound. Consider reducing your position when it returns to $4880;
If you are 'buying high between $4850-$4900': set a stop-loss at $4780 (70-120 dollars lower than your cost to control risk). If it drops to $4780, reduce your position by 20% to preserve some capital. If it doesn’t drop, hold on until sentiment stabilizes;
For those using leverage: reduce your leverage to 1-2x! The current emotional volatility is large; with 5x leverage, a slight 3% drop can lead to liquidation. Yesterday, a fan opened a 5x long position at $4850, which was liquidated when it dropped to $4800, losing $25,000. Such a pity.
2. For E guards looking to buy the dip: don’t rush in now; wait for two 'safe signals.'
Now at $4820, don’t blindly try to buy the dip; wait for more reliable signals:
Signal 1: ETH stabilizes above $4850, and U.S. stock market sentiment improves (Nasdaq futures rise from a drop of 1.2% to a drop of less than 0.5%); at this time, enter the market, set a stop-loss at $4800, and aim for $4900;
Signal 2: Pull back to $4750-$4800 (strong support level), and volume shrinks to about 30% of usual (for example, if the usual hourly trading volume is $4 billion, reduce to $1.2 billion), indicating the drop is stalling. Enter with a small position (5% of total funds), and set a stop-loss at $4700.
Old Zhou has been waiting to buy the dip: 'I plan to buy $20,000 worth of ETH at $4780. I currently have $100,000, only buying 20% of my position. Even if it falls, I would only lose $1600, which is a small risk.'
Four, a reminder to E guards: Don't be swayed by concept stocks, the core of ETH lies in these two points.
Many people are easily frightened by 'the drop in concept stocks.' Remember two phrases, and you won’t be swayed easily:
Concept stocks follow the U.S. stock market, while ETH follows on-chain: concept stocks move with U.S. market sentiment, while ETH follows on-chain supply and demand, institutional funds, and ecosystem activity. The linkage between the two is weak; don’t sell ETH just because concept stocks are falling;
Short-term sentiment is important, but long-term fundamentals matter more: ETH might fall short-term due to sentiment, but in the long run, ETH's staking volume is rising, RWA is gaining traction, and institutions are accumulating. As long as these fundamentals are intact, there’s no need to panic.
To put it frankly:
Ethereum concept stocks fell 4%-5%, which is not a big deal. Don’t be frightened by short-term emotions. The key is to 'manage risk well'—don't go all in, don't use too much leverage, set a stop-loss. Even if ETH falls short-term, the losses won't be too much. I will keep a close eye on ETH's $4800 support and changes in U.S. stock market sentiment. If there’s movement, I’ll inform the fan group immediately. Following the data is much more reliable than guessing on your own!
