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Recently, the Ethereum (ETH) market has experienced severe fluctuations, with prices plummeting from $2839 on February 24 to $2076, a drop of over 26% in five days. On-chain data shows that whale accounts are selling off in large quantities, spreading panic in the market. Behind this wave of selling, there are both short-term event impacts and deep-seated contradictions within the Ethereum ecosystem.

1. Whale Exodus: Multiple Pressures Behind the Sale of 440,000 ETH

1. On-chain Data Reveals Whale Movements In the past week, several whale addresses concentrated their sales, offloading approximately 440,000 ETH. For example, wallet address 0x07Fe transferred 10,000 ETH (about $23.44 million) to Binance, while 0xc725 sold 8074 ETH (about $19.63 million). This concentrated selling caused the ETH price to drop below $2300, raising concerns about support levels (such as $2100). Glassnode analysis indicates that if the market adjusts further, ETH could drop to $1890, where there is a strong support area of about 1.82 million ETH.

2. Staking Outflows and Inflation Return Since November 2024, the amount of ETH staked on the Ethereum chain has continued to see net outflows, decreasing from 34.95 million to 34 million, with the number of stakers dropping by 30,000. Meanwhile, Ethereum’s inflation rate returned to 0% after the Dencun upgrade, undermining the deflation narrative and further weakening investor confidence.

3. Layer 2 Controversies Intensify Selling Pressure Recently, Layer 2 networks (such as Base) have been accused of extracting high profits through centralized sorters and selling ETH, creating a “vampiric effect” on the Ethereum ecosystem. For instance, Base earned over $100 million through sorters in the past year, most of which was suspected to be sold after being transferred to Coinbase. This model has raised community doubts about the Layer 2 economic model, intensifying market selling pressure.

2. Where is the Market Bottom? The Game Between Technical and Financial Aspects

1. Technical Analysis: Key Support and Oversold Signals Currently, ETH is in a downward trend, with the Williams indicator showing that the market has entered an oversold zone, but trading volume continues to shrink, indicating insufficient buying momentum. Glassnode predicts that $1890 is a key support level; if it breaks, it may trigger more stop-loss orders; if it holds, it may rebound based on the accumulation of long-term holders in that area.

2. ETF Fund Inflows and Institutional Bottom Fishing Despite the low prices, Ethereum spot ETFs have seen continued net inflows recently. For example, BlackRock’s ETHA saw an inflow of $287 million in one week, and Fidelity’s FETH saw an inflow of $97.28 million. On February 4, after the crash, ETFs had a net inflow of $300 million in one day, indicating institutional intent to buy the dip. However, ETF funds only account for 3.15%, limiting their impact on price.

3. Contract Market Risk Accumulation Ethereum’s contract open interest reached $30 billion before the crash, far exceeding historical highs. On February 3, $380 million was liquidated in a single day, and after a double kill of long and short positions, open interest plummeted by $7 billion. High leverage combined with market volatility may exacerbate price fluctuations in the short term.

3. Future Path: Catalysts for Rebound and Potential Risks

1. Ecological Reform and Layer 2 Governance Vitalik recently called for Layer 2 to reinvest part of their profits back into the Ethereum ecosystem, such as through fee burning or supporting public goods. If the Layer 2 economic model is adjusted, it may alleviate selling pressure and reshape market confidence.

2. Macroeconomic Environment and Regulatory Trends Expectations of interest rate cuts by the Federal Reserve and U.S. cryptocurrency regulatory policies (such as ETF approval progress) will affect capital flows. If market sentiment improves, ETH may rebound alongside BTC.

3. Short-term Risks: Liquidity Crisis and Hacking Events The aftermath of the Bybit hacking incident and tight liquidity at exchanges may further suppress prices. If ETH falls below $1890, panic selling could drive prices down to the 2023 low (around $1000).

Conclusion: The Test of Faith and the Rebalancing of Long-term Value

The current predicament of Ethereum reflects a concentration of short-term speculative bubble bursts and structural issues within the ecosystem. While the faith in buying the dip has been shaken, institutional bottom fishing through ETFs and potential Layer 2 reforms still provide support for long-term value. Investors need to pay attention to the effectiveness of support in the $1890-$2100 range and the changes in capital flows within the ecosystem. The market bottom may be brewing in panic, but a rebound requires clearer catalysts—whether it be technological breakthroughs, ecological innovations, or shifts in macro policies.

In April 2025, Wall Street investment bank JPMorgan announced an investment of $720 million in the research and development of quantum-resistant cryptography technology, followed closely by institutions such as Goldman Sachs and BlackRock. A “arms race” surrounding quantum computing and the security of crypto assets is quietly heating up. This seemingly technical layout is, in fact, a struggle for control over future digital assets by global financial powers—when quantum computers can crack traditional encryption algorithms in just 0.3 seconds, crypto assets represented by Bitcoin are at a crossroads of security and collapse.

Quantum Computing “Nuclear Explosion”: Crypto Assets Tremble

The commercialization of quantum computers is progressing far beyond expectations. Google’s 105-qubit Willow chip completed a mathematical problem that would take traditional supercomputers “10²⁵ years” to solve in just 5 minutes, while Microsoft’s topological conductor chip Majorana 1 has achieved 10 million quantum operations per second. This computing power poses a dimensionality reduction attack on the existing encryption system:• Risk of Bitcoin Private Key Exposure: A Deloitte report indicates that 25% of Bitcoin in circulation uses P2PK addresses, whose public keys can be reverse-engineered by quantum computers to derive private keys, putting assets worth hundreds of billions of dollars at risk.• Consensus Mechanism Crisis: The SHA-256 algorithm relied upon by Bitcoin has not been directly cracked, but quantum computers can enhance mining efficiency to √N times that of traditional miners through Grover’s algorithm, threatening the balance of decentralized networks.

Even more severe is that the quantum threat has transcended the technical realm. The U.S. government’s National Cybersecurity Strategy explicitly requires the completion of the migration to quantum-resistant encryption by 2035, while the “Zu Chongzhi No. 3” quantum computer led by the University of Tokyo is simultaneously enhancing error correction capabilities, attempting to compete for the authority in setting technical standards.

Wall Street’s Shift from Panic to Technical Positioning

The layout of financial institutions is far more aggressive than market perception:Algorithm Upgrade Race JPMorgan is developing the CRYSTALS-Kyber algorithm in collaboration with NIST (National Institute of Standards and Technology), which generates keys three times faster than traditional RSA and can withstand Shor’s algorithm attacks. Goldman Sachs is betting on lattice-based cryptography, with its investment in PQShield providing quantum-safe payment protocols for the European Central Bank.

Commercialization of Quantum Key Distribution (QKD) BlackRock has invested in acquiring quantum communication company Qubitekk, integrating its fiber-optic QKD technology into cross-border settlement systems. In a quantum encrypted communication trial between New York and London, the key transmission for a $200 million transaction took only 47 milliseconds, 1200 times faster than traditional methods.

Building a Hybrid Encryption Ecosystem Citibank has launched a “classic + quantum” dual-track system: daily transactions still use the ECDSA algorithm, but each operation simultaneously generates a quantum-resistant signature backup. This “quantum safe” model has been trialed in supply chain finance for 30 multinational companies.

Who is Defining Future Security Standards?

The global quantum-resistant encryption technology presents a tripartite structure:• U.S. “Standard Hegemony”: The ML-KEM and Dilithium algorithms led by NIST have become ISO international standards, and Microsoft has integrated quantum-resistant algorithms into the Windows kernel, forming a binding of software and hardware ecosystems.• Tokyo University’s “Independent Breakthrough”: The University of Tokyo’s cryptography society promotes the SM9 algorithm, which avoids the risks of traditional public key storage through its identity-based encryption mechanism and has been applied in the pilot of digital RMB cross-border settlements.• EU’s “Alliance and Cooperation”: Germany’s Infineon has released the world’s first quantum-resistant encryption chip, combining hash signatures and lattice cryptography to provide “quantum immunity” solutions for the industrial Internet of Things.

The essence of this standard battle is the power to set the rules of the digital economy.

Multi-Party Game of Industry Ecosystem Reconstruction

The quantum threat is forcing the cryptocurrency industry to undergo a genetic-level transformation:

Cost of Technology Migration The Ethereum Foundation estimates that upgrading the entire network to quantum-resistant algorithms will consume $3.8 billion in Gas fees, equivalent to 43% of miners’ total revenue in 2024. This “surgical upgrade” may trigger short-term ecological turmoil.

Wall Street’s Calculations Institutional investors are not merely technical evangelists. A Morgan Stanley report shows that the quantum-resistant encryption market has a compound annual growth rate of 67%, forming a $280 billion industry chain by 2030. Goldman Sachs’ heavily invested quantum chip company PsiQuantum has more patents for photonic quantum computers than the combined total of IBM and Google.

Survival Rules for Digital Assets in the Quantum Era

The threat of quantum computing hangs like a sword of Damocles, yet unexpectedly activates the evolutionary potential of crypto assets:• Technical Anti-Fragility: Bitcoin’s UTXO model is more compatible with quantum-resistant algorithms than the account model, as its “unspent transaction output” mechanism can naturally isolate quantum attack risks.• Value Anchor Migration: When traditional encryption algorithms fail, quantum-resistant features will become the “new consensus” for digital assets. Zcash has launched the “Orchid Project” to achieve quantum-safe privacy transactions through zero-knowledge proofs.• Balancing Regulation and Innovation: The U.S. Treasury plans to establish a “quantum security certification center” to provide fast approval channels for compliant quantum-resistant projects, and this “sandbox regulation” may foster a new generation of financial infrastructure.

In this quantum arms race, Wall Street’s layout has long surpassed short-term interests. As Goldman Sachs’ head of digital assets stated: “We are not buying technology; we are investing in the financial discourse power of the next decade.”

(This article’s data is compiled from NIST technical white papers, JPMorgan annual reports, and public industry reports)

『Disclaimer: This content is compiled from public market information and analyst opinions, intended for educational exchange among Web3 industry enthusiasts, and does not constitute any specific investment advice. Decisions should be made cautiously, and market risks should be noted.』