The price of Ethereum (ETH) fell 6.2% to form a local bottom at $2,020 on Friday, May 22, as on-chain metrics point to a collapse in decentralized finance activity and waning liquidity.
According to data from CryptoQuant, the seven-day moving average of active addresses for Wrapped Bitcoin (WBTC) on Ethereum fell to 2,134 as of May 21, its lowest level since the beginning of the year. This metric is a key pipeline for Bitcoin liquidity entering the Ethereum DeFi ecosystem, and its decline suggests capital has stopped moving into yield-generating protocols.
The drop follows a false-start spike in February when active addresses briefly neared 5,400. The decline has been compounded by heavy Bitcoin spot selling pressure on Binance and significant negative stablecoin netflows, per the on-chain analytics firm. This combination of increased selling and a lack of dry powder on exchanges creates a difficult environment for any sustained price recovery.
The stagnation in DeFi and lack of buying power suggest Ethereum lacks the underlying liquidity to absorb selling pressure, potentially signaling further downside unless on-chain activity or stablecoin inflows reverse. The move contrasts with Bitcoin's recent strength, which saw the leading cryptocurrency surpass $77,000 earlier in the month.
This price drop could trigger further fear-driven selling among retail participants. An August 2025 survey found that 84 percent of retail crypto traders lose money in their first year, with emotional decisions often cited as a key factor. While short-term indicators appear bearish, some corporate entities maintain long-term conviction. BitMine Immersion Technologies, for example, continues to hold approximately 5.28 million ETH, representing about 4.4% of the total supply, despite sitting on billions in unrealized losses, according to CoinGecko data.
This article is for informational purposes only and does not constitute investment advice.
