Ethereum Falls 7% After Major DeFi Protocol Hack Amid Market Declines

Ethereum has experienced significant price volatility recently, falling below critical support levels to around $3,600 after a large hack on the Balancer DeFi protocol resulted in losses exceeding $100 million. This price drop coincides with a 24% decline in Ethereum's network activity, indicating rising bearish sentiment among investors and a potential continuation of the downtrend. Institutional interest in Ethereum has also diminished, with ETH-backed ETFs seeing sharply reduced inflows and ongoing outflows, as highlighted by Matrixport, which identifies BitMine as the sole consistent buyer supporting demand. Despite this, BitMine has increased its holdings to about 3% of Ethereum's total supply, although analysts caution that this support might be temporary. Broader crypto market weakness is compounded by macroeconomic factors, including a stronger US dollar and cautious Federal Reserve signals, leading to profit-taking and leveraged liquidations in both Ethereum and Bitcoin. While short-term consolidation and further correction are possible, long-term investor sentiment remains cautiously optimistic, viewing recent price movements as part of a typical market cycle.