The latest drop in Ethereum’s price has placed Wall Street veteran Tom Lee’s ambitious $1.3 billion ETH treasure bet under severe pressure, as whales and institutional funds begin to pull out of the world’s second-largest crypto asset.
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Falling Ethereum Prices and Growing Bitmine Losses
Ethereum fell more than 20% in two days, slipping below $3,300 and wiping out more than $1 billion in leveraged positions. The correction sent ETH down around 30% from its August high, marking its weakest level since mid-July.
According to 10x Research, Lee’s company, Bitmine Immersion Technologies Inc., which acquired 3.4 million ETH at an average price of $3,909, is now facing paper losses exceeding $1.3 billion.
Backed by billionaire Peter Thiel, Bitmine has adopted a Bitcoin-style corporate treasury model, but its funds are now “fully invested and under pressure,” leaving little room for defensive moves.
Bitmine’s market cap-to-NAV ratio fell from 5.6 in July to 1.2, while its stock fell 70% from its peak, reflecting a sharp revaluation of crypto-treasury valuations.
ETHZilla, another Ethereum holding company, has already liquidated $40 million worth of ETH to restore its balance sheet, signaling increasing corporate capitulation in the sector.
ETH's price trends to the downside with small profits on the daily chart. Source: ETHUSD on Tradingview
Whales retreat as liquidations increase
On-chain data from Arkham Intelligence indicates that a large Ethereum whale recently offloaded 5,570 ETH ($19.56 million) to Binance, resulting in a loss of $2.15 million. This decision amplified the selling pressure in a context of low liquidity. ETH’s market cap has now fallen to around $400 billion, with the token down 17% weekly.
Technical indicators paint a cautious picture. ETH has fallen below its 50-day moving average ($4,094), with an RSI near 31, suggesting near-oversold conditions but no confirmed reversal. Analysts warn that failure to hold the $3,300 support could trigger a deeper correction towards the $3,000-2,700 zones.
Institutional demand fades, but fundamentals remain intact
After attracting over $9 billion in ETF inflows during the summer rally, Ethereum products have since seen $850 million in outflows, while futures open interest has fallen by $16 billion. Retail enthusiasm has also waned, with Google search interest in Ethereum now only 13% of its annual peak.
Despite the economic slowdown, the fundamentals of the Ethereum network remain strong. It continues to process the highest on-chain value among smart contract platforms, and Vitalik Buterin’s proposed layer 2 upgrade aims to reduce rollup withdrawal times to one or two days, which could potentially boost adoption.
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For now, however, Lee’s high-stakes Ethereum bet serves as a cautionary tale of excessive optimism colliding with a cooling market, leaving investors wondering whether Bitmine’s billion-dollar loss marks the start or bottom of Ethereum’s latest cycle.
Cover image from ChatGPT, ETHUSD chart from Tradingview
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