DeFi sector could be at huge risk if ETH declines to $1,000

Ethereum price today: $1,920

• Ethereum could trigger massive liquidations and dampen investors’ interest in DeFi if its price falls to $1,000, noted a key expert.
• The top altcoin’s underperformance comes at a time when DeFi is facing backlash due to its role in helping Bybit hackers obfuscate stolen funds.
• ETH could decline to the $1,500 key support level if it fails to sustain a firm recovery above $2,200.

Ethereum (ETH) gained 3% on Friday, trading above $1,900 at press time. Despite the recent slight gains, the top altcoin could spark a huge loss in the DeFi sector if it resumes a bearish trend and declines toward $1,000.

Ethereum’s decline could trigger huge risks in DeFi

Ethereum risks sparking heavy losses across the DeFi sector if its price falls to $1,000, James Toledano, Chief Operating Officer at Unity Wallet, told FXStreet.

“The prospect of a $1,000 price-point is a topic of active debate in the DeFi vertical,” said Toledano. “Ethereum serves as the foundational platform for a vast majority of DeFi projects, and a substantial price drop could lead to decreased total value locked (TVL) across DeFi protocols, reduced liquidity, and diminished investor confidence,” he added.

Ethereum has been one of the worst-performing coins among top cryptocurrencies in the past year, falling to levels last seen in November 2023 following the recent crypto market crash.

Since December 2024, the TVL across all DeFi protocols has declined by 30% from about $130 billion to $90 billion, while that of Ethereum is down ~40% down from about $75 billion to $46 billion, per DefiLlama data.

If ETH continues the downward trend, especially with speculations of a potential bear market looming, it could spark major liquidations and discourage new investment in the sector.

“The optics and perceived instability could prompt users to seek alternative platforms or delay participation in DeFi ventures, potentially stalling innovation and growth within the sector,” added Toledano.

The prediction comes at a time when DeFi still faces backlash from aiding the hackers who exploited crypto exchange Bybit for about $1.5 billion in ETH to obfuscate the funds. The attackers leveraged cross-chain protocol THORChain to swap over 70% of the stolen ETH for BTC, with Asgardex, a DEX on the protocol, earning fees of about $900,000 for facilitating most of the swaps.

“Proponents of DeFi argue that the decentralized nature of these platforms absolves them of responsibility for illicit activities conducted by users. Meanwhile, critics insist that such protocols and positions are incompatible with the law,” noted K33 Research in a Friday report.

“OFAC sanctions, developer prosecutions, and exchange delistings are all on the table as DeFi clashes with a TradFi world,” they added.

Ethereum Price Forecast: $1,500 still in the picture if ETH fails to see a firm recovery above $2,200

Ethereum recorded $21.02 million in futures liquidations in the past 24 hours, per Coinglass data. The total amount of long and short liquidations accounted for $5.86 million and $15.16 million, respectively.

ETH continued its struggle for directional bias within a key rectangular channel — a move it has maintained since declining below $2,200 and finding support near $1,750.

ETH/USDT weekly chart

Glassnode’s data shows that the amount of ETH purchased around $1,880 increased from 1.6 million ETH to 1.9 million ETH in the past few days, reinforcing the strength of its closest support level at $1,750. This also aligns with social trends, which show increased usage of words like “buy-the-dip” and “bottom” since ETH reached $1,800.

However, sustained failures to see a firm recovery above $2,200 put a decline to $1,500 in the picture, especially as it marks the next rectangular channel major support.

The Relative Strength Index (RSI) is below its neutral level, while the Stochastic Oscillator (Stoch) is in the oversold region, indicating that bears still dominate ETH’s market. The momentum could shift toward bulls if the Stoch sees a firm cross above its moving average line.

A weekly candlestick close above $2,200 will invalidate the thesis.