ETH falls below $1900! Behind the 22% plunge lies Vitalik's "five-year austerity" strategy.

Author: Max.s

The current cryptocurrency market is undergoing a dramatic structural adjustment. Looking at the latest trading data (as shown on the chart, ETH/USDT has fallen to around $1,847.84, with a clear recent downward trend), Ethereum (ETH) is experiencing a deep correction driven by both funding and expectations.

Looking back at the price movement in February 2026, ETH plummeted from above $2,360 to the $1,825 range in a short period, a drop of over 22.7%. Behind this price decline lies a comprehensive restructuring of the Ethereum network, encompassing technological upgrades, organizational structure, and compliance environment. For institutional investors and financial professionals, understanding the shift in the underlying asset logic of Ethereum, beyond short-term price fluctuations, is a core challenge.

The most immediate pressure Ethereum faces comes from the continuous withdrawal of liquidity. This capital outflow is not an isolated event, but rather a result of the convergence of multiple sources of capital.

Spot ETFs experienced net redemptions , indicating a significant increase in risk aversion among institutional investors. For example, on January 29, 2026, US spot Ethereum ETFs recorded a massive single-day net outflow of $155.7 million. Specifically, Fidelity's FETH saw a net outflow of $59.2 million, BlackRock's ETHA a net outflow of $54.9 million, and two Grayscale funds also recorded outflows of tens of millions of dollars. This suggests that traditional Wall Street capital is systematically reducing its exposure to Ethereum.

Early sell-off: On-chain data shows that whale accounts sold approximately 1.43 million ETH in just two weeks.

Founder Cashes Out: This month, Ethereum co-founder Vitalik Buterin sold over 8,800 ETH, cashing out approximately $18.45 million. In traditional financial markets, such concentrated selling by core management is typically seen as a major negative factor, further exacerbating market panic.

Faced with a harsh market winter, the Ethereum Foundation (EF) has made a defensive shift in its financial strategy. Vitalik Buterin announced that the foundation will enter a five-year "moderate austerity" phase.

From a corporate finance perspective, this is a classic cash flow management strategy. Its core objectives are twofold: first, to ensure the foundation can continue to fund the development of Ethereum's core underlying technology in the future, avoiding threats to its independence due to excessive resource consumption; and second, to ensure that Ethereum's ambitious roadmap as a high-performance "world computer" is delivered on schedule.

To align with this strategy, Vitalik himself proactively reduced the reliance of some "special projects" on the foundation's funding. Instead, he chose to withdraw 16,384 ETH and utilize decentralized staking rewards to personally fund the research and development of open-source software, hardware, and privacy protection projects with public goods characteristics. This practice of internalizing peripheral R&D expenditures and focusing on core business signifies that capital operations within the Ethereum ecosystem are maturing and becoming more restrained.

While prices are under pressure, Ethereum's technical fundamentals have shown remarkable resilience, even exhibiting a rare phenomenon of "price-volume divergence." Recently, the Ethereum network's TPS (transactions per second) hit a record high of 75,862, far exceeding the previous peak of 58,786.

This is primarily due to the Fusaka upgrade deployed last December. This upgrade introduced the PeerDAS mechanism, significantly increasing the data throughput of the Layer 2 network. However, with the explosion in data volume, new systemic risks are emerging. Vitalik points out that the network faces serious centralization risks because current block builders still need to download complete data.

To address this potential threat, Ethereum plans to launch the Glamsterdam upgrade in 2026, which is essentially a fundamental reform aimed at addressing the oligopoly within the network.

The ePBS mechanism reshapes the distribution of benefits : The core of this upgrade is ePBS (separation of proposers and builders within the protocol). It forces the block building process to be incorporated into the underlying protocol, weakening the absolute dominance of the current few external builders in the market by standardizing the bidding process.

Preventing rent-seeking by giants : For financial professionals, this means that Ethereum is actively intervening in its internal MEV (Maximum Extractable Value) market structure, breaking down the technological barriers of leading capital, and reconstructing the underlying logic of staking rewards.

In addition to the growing pains of the internal architecture, the Ethereum ecosystem also faces the looming threat of regulatory intervention. The EU's MiCA (Crypto Asset Markets Act), which will come into full effect on July 1, 2026, requires all crypto companies operating within the EU to meet stringent compliance standards.

The implementation of this bill will directly impact the vast DeFi protocols, liquidity providers, and related derivatives market on the Ethereum blockchain, which lack the backing of traditional corporate entities. The sharp rise in compliance costs and the early withdrawal of some non-compliant funds are the underlying macroeconomic factors driving the recent continuous bleeding in the spot market.

Ethereum is currently in a period of divergence: on the one hand, there is the relentless sell-off of short-term capital and the upfront pricing of strict regulation; on the other hand, there is the robust expansion of its technological infrastructure and a self-revolution against internal monopolies. This is a typical "deleveraging" process that trades short-term pain for long-term system stability.