While watching the market closely, the next steps for the Ethereum Foundation will be crucial in determining its financial resilience and ability to weather the storm. Bitcoin’s market capitalization is around $1.6 trillion, while its dominance over altcoins has risen to 58.9%.
Ethereum leads altcoins crash
The situation with some Bitcoin competitors is worse. The second-largest cryptocurrency – Ethereum (ETH) – fell to a 17-month low of $1,790 before recovering slightly to $1,900 currently. However, this represents a 10% price drop on a daily basis.
Ripple (XRP), Solana (SOL), Cardano (ADA), Dogecoin (DOGE), B Network (PI), and many other altcoins have also entered the red, albeit with less substantial losses than Ethereum.
The very few cryptocurrencies on the list of the top 100 coins that have headed north in the past twenty-four hours include Story (IP),Move (MOVE), MANTRA (OM), and Mantle (MNT).
The total market capitalization of cryptocurrencies is currently around $2.75 trillion, which represents a 2.5% decline on the day.
Despite these efforts, Ethereum remains highly vulnerable to market volatility. If Ethereum fails to recover, further depletion of the treasury could force the organization to liquidate its assets more aggressively or even raise funds from abroad, which could affect its long-term mission.
The Ethereum Foundation’s heavy reliance on Ethereum as a treasury asset puts it in a precarious position amid the ongoing market decline.
While strategic asset management and participation in decentralized finance have helped support its operations, the risk of forced liquidation remains an imminent threat. If Ethereum prices continue to fall, the organization may need to rethink its financial strategies to ensure continued support and development of the Ethereum ecosystem.
Sharp drop in Ethereum threatens DeFi loans
Ethereum (ETH) is currently trading at around $1,850, which represents a significant drop of about 10% over the past 24 hours. This sharp downward movement sent shockwaves through the cryptocurrency ecosystem, especially in the decentralized finance (DeFi) sector where Ethereum ETH/USD serves as the primary collateral for billions of dollars in loans.
Currently, a huge DeFi loan on the Sky (formerly Maker) platform backed by about $130 million of Ethereum is seriously close to collapse. After borrowing $74 million in DAI stablecoins using 65,680 Ethereum as collateral, the borrower was forced to act defensively after the Ethereum price fell below the key liquidation level of $1,900.
Block chain records show the borrower’s frantic attempt to hold his position, withdrawing 2,000 Ethereums (about $4 million) from Bitfinex and depositing them in their Sky vault. Prices continued to fall, so they lowered their risk by withdrawing $1.6 million from Binance, changing it to DAI., and then use those proceeds to pay off their outstanding debt to $73.1 million.
With a new liquidation threshold of $1,836 – dangerously close to the current ETH trading range of around $1,870, the situation remains at risk despite these emergency measures.
Broader market risk: $366 million in potential liquidations
The dilemma goes beyond this large space. DefiLlama figures show that if ETH falls to $1,857, about $13.6 million of DeFi loans face liquidation; another $117 million is at risk if prices fall to $1,780. Another 20% drop in the total ETH price could result in $366 million asset liquidation.
These potential liquidations create a worrying feedback loop: DeFi protocols sell collateral from liquidated holdings, and selling pressure rises on ETH, which can lead to lower prices and thus provoke further liquidations.
Fears of financial liquidation of the Ethereum Foundation
As of March 10, 2025, concerns about the financial stability of the Ethereum Foundation (EF) are growing due to the continued decline in Ethereum (ETH) prices. Due to the institution’s treasury relying heavily on ETH, a prolonged decline in the market poses significant liquidation risks that can affect its long-term sustainability.
According to Ethereum’s latest financial disclosures, its treasury was valued at approximately $970.2 million as of October 31, 2024, down from $1.6 billion in March 2022. This 39% drop stems from annual expenses – averaging $120 million per year – and a 22% drop in the price of ETH over the past two years.
81.3% of EF Treasuries’ Treasuries are held in cryptocurrencies, especially in ETH. While this indicates strong confidence in the future of Ethereum, it also exposes the institution to increased risk during bear markets. With the fluctuations in ETH prices the value of the treasury remains volatile, and prolonged price declines could significantly weaken the operating capacity of the EF Fund.
Liquidation concerns amid ETH sell-off
Recent Treasury moves have heightened concerns about Ethereum’s liquidity strategy. In December 2024, the institution sold 100 Ethereums for 374,334 DAI, adding to the 4,266 Ethereums liquidated throughout the year. Revenue from these sales totaled approximately $12.21 million, with an average price of $2,796 per Ethereum.
These periodic sell-offs indicate that EF is actively managing its treasury to cover operating expenses. However, with the price of ETH under constant downward pressure, the institution may be forced to sell larger portions of its holdings at less favorable prices. If ETH falls below key support levels, EF capacity be exposedto maintain its current financial obligations under serious threat.
