Tom Lee’s $1.3B Ethereum Bet Under Pressure as ETH Extends Decline and Whales Exit Positions

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The Ethereum price latest market slump has placed Wall Street veteran Tom Lee’s ambitious $1.3 billion in ETH treasury bet under severe pressure, as whales and institutional funds begin to retreat from the world’s second-largest crypto asset.

Ethereum’s Price Drop and Bitmine’s Mounting Losses

Ethereum has fallen over 20% in two days, sliding below $3,300 and erasing more than $1 billion in leveraged positions. The correction has pushed ETH down about 30% from its August peak, 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, now faces paper losses exceeding $1.3 billion.

Backed by billionaire Peter Thiel, Bitmine adopted a Bitcoin-style corporate treasury model, but its funds are now “fully invested and under strain,” leaving little room for defensive moves.

Bitmine’s market capitalization-to-NAV ratio has plunged from 5.6 in July to 1.2, while its stock has tumbled 70% from its peak, reflecting a sharp reassessment of crypto-treasury valuations.

Another Ethereum-holding firm, ETHZilla, has already liquidated $40 million worth of ETH to restore its balance sheet, signaling growing corporate capitulation across the sector.

ETH's price trends to the downside with small profits on the daily chart. Source: ETHUSD on Tradingview

Whales Retreat as Liquidations Rise

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 move amplified selling pressure amid weak liquidity. ETH’s market cap has now dropped 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 the 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 toward $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 dropped by $16 billion. Retail enthusiasm has also waned, with Google search interest for Ethereum now just 13% of its yearly peak.

Despite the downturn, Ethereum’s network fundamentals 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 cut rollup withdrawal times to one or two days, potentially boosting adoption.

However, for now, Lee’s high-stakes Ethereum wager stands as a cautionary tale of over-leveraged optimism colliding with a cooling market, leaving investors to wonder whether Bitmine’s billion-dollar loss marks the start, or the bottom, of Ethereum’s latest cycle.

Cover image from ChatGPT, ETHUSD chart from Tradingview

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