ETH plummets to $1,540 on Friday amid broader crypto selloff and security concerns
Ether fell to a 13-month low of $1,540 on Friday following a critical vulnerability discovery in the Zcash blockchain and Bitcoin’s drop below $60,000, according to derivatives data tracked by Deribit and on-chain metrics from Glassnode.
The price collapse triggered $1.28 billion in leveraged long liquidations over five days, with an additional $500 million in leveraged ETH long positions liquidated in the 48 hours prior to Friday. Deribit’s put-to-call premium ratio spiked to 3.7 times on the day, signaling heavy bearish positioning in options markets.
The Zcash vulnerability, discovered using Anthropic’s Opus 4.8 AI model on May 29, allowed unlimited ZEC minting in the largest Zcash zero-knowledge pool and had remained undetected since 2022. The discovery triggered widespread contagion fears across the broader cryptocurrency ecosystem, with traders concerned that other blockchains and smart contracts could harbor similar flaws.
Ethereum network total value locked (TVL) contracted sharply, reaching its lowest level since February 2024 according to DefiLlama. Major Ethereum DApps experienced significant outflows: Spark TVL fell 50%, Ether.fi dropped 49%, EigenCloud declined 41%, and KernelDAO contracted 39%. Smaller deposits in DApps reduce ecosystem revenue and demand for ETH use in smart contracts.
The price decline reflects broader market weakness. Bitcoin’s selloff below $60,000 marked the first time in months the asset traded at that level. Ether is now trading 67% below its all-time high from August 2025.
On-chain metrics suggest extreme pessimism. Only 30% of the ETH supply is currently profitable relative to when coins were last moved, according to Glassnode. This setup occurred previously in mid-March 2020 during the COVID crash and mid-December 2019, which preceded a 118% ETH rally within 60 days.
Large Ethereum holders face mounting losses. Bitmine, the largest Ethereum treasury firm, holds 4.5% of the entire ETH supply and is sitting on a $10.5 billion unrealized loss. FG Nexus offloaded an additional $17.8 million in Ether while nursing $100 million in losses.
Security incidents have compounded market anxiety. In April 2026, cryptocurrency hacks totaled $630 million across six blockchains including Ethereum, Solana, Base, BNB Chain, Sui, and PulseChain. KelpDAO’s $293 million hack and Drift Protocol’s $280 million exploit accounted for 82% of monthly losses across 25 protocols tracked by Laevitas.
Perpetual futures funding rates flipped negative on Friday, indicating that traders holding long positions are paying shorts to hold their positions. This cascading liquidation dynamic has cut off potential relief bounces, according to derivatives data.
What happens next
Historical precedent suggests recovery may be possible. The mid-December 2019 setup, which also showed 30% of ETH supply in profit, preceded a 118% rally within 60 days. However, the current environment combines price weakness with structural concerns about smart contract security across multiple blockchains, not just Ethereum.
