Ethereum falls over 6%, crypto market total market capitalization drops to about $3.8 trillion

On October 7, 2025, the crypto market experienced the most significant pullback of the quarter. Ethereum (ETH) fell over 6% within 24 hours, leading the overall crypto assets market capitalization to decline by 4.2%, dropping to about $3.8 trillion. This fall not only reflects the market's uncertainty regarding macroeconomic and regulatory policies but also exposes the reality that some popular tokens lack support at high levels.

In the past few months, the crypto market has continued to attract inflows from institutions and retail investors, and this recent sharp fall has prompted investors to reassess the importance of market valuation and risk management.

1. Ethereum leads the decline of mainstream coins, with a market capitalization shrinkage of over $40 billion.

As of the time of writing, ETH is priced at $3,960, with a daily fall of 6.3%. Over the past week, ETH has pulled back from a high of $4,250, and its market capitalization has evaporated by more than $40 billion.

According to data from CoinMarketCap, Bitcoin (BTC) fell by 3.9% during the same period, reporting at $66,800, while mainstream assets such as Binance Coin (BNB) and Solana (SOL) also generally fell between 5% and 8%.

Analysts point out that this round of fall is mainly influenced by three major factors:

1. Macroeconomic data is weak: The U.S. September employment data fell short of expectations, raising concerns in the market about an economic slowdown.
2. The dollar and U.S. Treasury yields rebounded: funds are flowing back to traditional safe-haven assets, suppressing risk markets.
3. Acceleration of crypto fund outflows: Data shows that the net outflow of crypto funds in the past week exceeded $780 million, marking the third highest record this year.

2. The $3.8 trillion market capitalization threshold: Divergence of bullish and bearish sentiment

As the total market capitalization fell below $4 trillion, market sentiment quickly shifted from optimistic to cautious.

Gate Research's data shows that the Fear & Greed Index has fallen from last week's 72 (extreme greed) to 53 (neutral).

From the perspective of capital flow, the proportion of stablecoins (USDT, USDC) has significantly increased, indicating that some funds have chosen to temporarily exit and wait. Meanwhile, on-chain trading activity has slightly decreased, with the average daily transaction volume on Ethereum dropping by about 9% compared to last week, and Gas fees have fallen to an average of 21 Gwei, marking a two-month low.

3. Technical Analysis: ETH key support at $3,800

From a technical analysis perspective, the short-term structure of ETH is still in the adjustment phase. The 50-day EMA is located around $4,050, creating upper pressure, while the lower $3,800 is the current key support level that the market is focusing on.

If ETH falls below this range, the next support point may be between $3,600 and $3,650; conversely, if the price stabilizes around $3,800 and starts to increase again, it is expected to restore the medium-term upward trend.

It is worth noting that the implied volatility (IV) in the options market has significantly increased this week, rising from 38% to 46%, indicating that traders expect short-term volatility to continue.

4. Market Sentiment: Short-term pullback, long-term confidence remains.

Despite the current market sentiment being conservative, most institutional investors believe that this pullback resembles a "healthy consolidation" within a bull market.

A report from Galaxy Digital indicates that the long-term growth logic of the Ethereum ecosystem has not changed, especially against the backdrop of Layer 2 scaling, DeFi recovery, and the stable growth of the staking economy, where the network usage of ETH remains robust.

According to Dune Analytics data, the total amount of staked Ethereum has exceeded 35 million ETH, accounting for approximately 29% of the circulating supply. As more institutions participate in staking activities, the liquidity of ETH supply is gradually tightening, providing potential support for medium to long-term prices.

V. Macroeconomic and Future Outlook

From a macro perspective, the market will continue to focus on the following variables in the coming weeks:

• US inflation data (CPI) and interest rate expectations: If the Federal Reserve signals a delay in interest rate cuts, risk assets may continue to be under pressure.
• Ethereum ETF approval progress: REX-Osprey and BlackRock's Ethereum products are both awaiting regulatory approval. Any new developments may reshape market confidence.
• Trading enthusiasm in the Asian market: With the gradual relaxation of crypto regulations in Hong Kong and Singapore, Asian capital may become the next driving force.

6. Conclusion: Volatility is the footnote of trends

ETH fell by over 6%, and the total market capitalization dropped to around $3.8 trillion. It seems to be a short-term fluctuation, but in reality, it is a natural phenomenon in the process of Crypto Assets maturing.