The Ethereum market has entered a tense phase as falling prices clash with rapidly rising on-chain activity, pointing to a possible capitulation period. Data from a recent CryptoQuant report shows Ethereum’s price dropping from near $3,000 to the $2,000 range while token transfers surged sharply. The divergence suggests intense stress across the network as investors move assets quickly during the downturn.
At the same time, the Ethereum Foundation announced a new security initiative to protect users amid a spike in activity across decentralized finance.
According to the CryptoQuant report by analyst CryptoOnchain, Ethereum’s decline coincided with a sharp increase in ERC-20 token movement. The 14-day simple moving average of total tokens transferred jumped from about 1.6 million on January 29 to 2.75 million by February 7.
This reading marked the highest level for the metric since August 2025.
The analyst linked the surge to widespread panic selling and rapid portfolio rotation. Investors appeared to move funds toward stablecoins or exchanges as prices fell, increasing transaction velocity across the network. Such behavior often reflects urgency rather than long-term positioning.
The report also connected the activity to decentralized finance mechanics. Liquidations and collateral adjustments likely added to transfer volumes as falling prices triggered automated responses. These combined flows compressed heavy sell pressure into a short time window.
CryptoOnchain described the current environment as one of peak fear across the Ethereum ecosystem. Historically, extreme spikes in transfer velocity during downtrends have aligned with capitulation phases. These phases often coincide with weaker holders exiting positions rapidly.
The analyst noted such conditions have previously appeared near local bottoms. As selling pressure concentrates and exhausts itself, markets often stabilize afterward. Yet the report limited its scope to historical patterns rather than future price direction.
Could this surge in activity mark the final wave of sell pressure before Ethereum finds a local base? The report framed the question through observed data without projecting outcomes. All observations remained tied to on-chain metrics and past behavior.
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While markets showed stress, the Ethereum Foundation moved to strengthen ecosystem security. The foundation partnered with the nonprofit Security Alliance, also known as SEAL, under a new Trillion Dollar Security initiative. The program aims to stop wallet-draining attacks before they reach users.
As part of the partnership, the foundation funded a security engineer embedded within SEAL’s intelligence team. The role focuses on tracking how wallet drainers evolve and sharing defenses across the ecosystem. The goal centers on prevention rather than recovery after losses occur.
Wallet-draining scams have remained a persistent DeFi threat. Data from ScamSniffer shows these attacks have drained nearly $1 billion from users over time. In 2025, losses fell to $83.85 million, marking an 83 percent annual drop.
The initiative also introduced a public Trillion Dollar Security dashboard. The tool tracks six security pillars, which include governance risks, threat intelligence sharing, and white-hat protections. Ethereum secures more than $600 billion in on-chain assets as of early 2026, which demonstrates the ongoing value of its assets.
Ethereum’s price drop toward $2,000 coincided with a surge in on-chain activity that reflected panic selling, DeFi liquidations, and rapid token movement. At the same time, the Ethereum Foundation launched a major security initiative with SEAL to curb wallet-draining scams and strengthen protections as network value continues to grow.