Ethereum slipped below $2,000 for the first time since early 2025.

CryptoPolitan, a blockchain media outlet, reported on May 28 local time that Ethereum at one point traded at $1,972.82 and fell 13.4% over the past month. It has also logged a loss of about 6% on a cumulative basis for the second quarter.

The market sees the decline not as a simple price correction but as a reassessment phase that reflects actual demand and usage on the Ethereum network, as well as investor sentiment. Ethereum’s fear and greed index also showed the current market mood in the “fear” zone.

Its presence versus bitcoin also weakened. Ethereum’s market-cap dominance fell to 9.43%, while bitcoin’s dominance rose to 57.7%. The ETH/BTC ratio also stalled around 0.027 BTC. This is a signal that funds within the crypto market are tilting more toward bitcoin than Ethereum.

Volatility increased in derivatives markets. Over the past 24 hours, liquidations of Ethereum long positions totaled $241 million. The liquidation heat map shows long-position liquidity concentrated near $1,950, raising talk that prices could fall further to that zone. By contrast, short positions are clustered around $2,100, leaving room for a short squeeze if prices rebound.

Rising open interest is also cited as a factor increasing the likelihood of greater volatility. Coinalyze data showed Ethereum open interest rose to $12.5 billion, while CoinGlass figures put it at about $32.69 billion, including the Chicago Mercantile Exchange and small to mid-sized exchanges. With a recent increase in aggressive short positions also confirmed, short-term price moves are more likely to swing sharply around liquidation zones. Spot investors are also showing signs of reassessing Ethereum’s appeal and growth potential as a long-term holding.

Ethereum’s weakness is also weighing on DeFi. More than 32% of all Ethereum is currently staked, and the network is still generating more than $20 million in fees. Transaction fees, however, have fallen to record lows, partially weakening profitability for staking participants and node operators. Even so, the staking queue stood at more than 3.8 billion ETH, while the unstaking queue was limited to about 200,000 ETH.

The scale of DeFi funds has shrunk more noticeably. Assets locked in Ethereum-based DeFi protocols now stand at $41.78 billion, down sharply from levels above $91.0 billion in August 2025. A bear market and recent hacking incidents have undermined confidence, and the rise of Solana and Hyperliquid as more active DeFi hubs also had an impact.

At Aave, a major lending protocol, loan volume fell to $8.0 billion, down 14% over the past month. Total active lending across Ethereum also shrank from $20.0 billion to around $16.0 billion. The fallout from the KelpDAO hack and the drop in Ethereum’s price worked together. Still, most Ethereum loans have liquidation prices far below current levels, and it was seen as not having led to cascading liquidations across DeFi.

Fund flows from institutional and retail investors are also not supportive. Outflows from exchange-traded funds have appeared again, and liquidity in the crypto market has declined as investor interest shifts to equities. Against this backdrop, Ethereum’s weakness is spreading beyond a short-term price issue into a test of how long the Ethereum ecosystem’s revenue structure and DeFi-based demand can be sustained.