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Tom Lee and K3 Capital Increase ETH Accumulation Below $2,000

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Inflows into ETH Accumulation Addresses. Source: CryptoQuant.

For some institutional investors, trading ETH below $2,000 represents an opportunity rather than a risk, despite growing concerns about expanding unrealized losses.

ETH has now entered its sixth consecutive month of decline. This marks the longest losing streak since the 2018 downtrend.

Tom Lee and K3 Capital Boost ETH Holdings as Staking Ratio Hits Record High

According to Lookonchain, Tom Lee — founder of Fundstrat and head of Bitmine — executed large ETH purchases during the third week of February.

On February 18 alone, Bitmine acquired an additional 35,000 ETH worth approximately $69.37 million. The purchase included 20,000 ETH, valued at $39.8 million, from BitGo, and 15,000 ETH, valued at $29.57 million, from FalconX.

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K3 Capital also made a significant move. Data from OnchainLens shows that a wallet linked to the investment fund purchased 20,000 ETH worth $40.08 million from Binance.

These sizable transactions reflect strong long-term conviction in ETH, even as the asset trades below $2,000.

Data from CryptoRank indicates that long-term investors have increased Ethereum accumulation during the current downturn.

Inflows into ETH Accumulation Addresses. Source: CryptoQuant.
Inflows into ETH Accumulation Addresses. Source: CryptoQuant.

Meanwhile, data from CryptoQuant shows that inflows into ETH accumulation addresses over the past six months have reached the most active period in history. History shows that in 2018, ETH experienced seven consecutive months of decline before recovering.

“The whales and the largest banks are buying and building on ETH. These are the highest inflows into whale‑accumulation wallets we’ve seen. Meanwhile, retail has abandoned it and is calling for its failure. They’re tired and exhausted after watching the price chop inside this massive range for five years.” – Crypto investor Seth commented.

Another key milestone has emerged. For the first time in Ethereum’s 11-year history, more than half of the total ETH supply has been staked.

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On-chain data platform Santiment reports that over 50% of the ETH supply now resides in the Proof-of-Stake (PoS) contract.

The Total ETH Held by The Ethereum PoS Contract Address. Source: Santiment
The Total ETH Held by The Ethereum PoS Contract Address. Source: Santiment

This contract functions as a one-way vault. Investors deposit ETH into staking to secure the network. Staked coins temporarily leave circulation and cannot be traded.

Staking activity has continued to rise, particularly during bearish cycles. As more ETH becomes locked, the liquid supply declines.

“When over 50% of the supply is locked in staking, liquid supply shrinks. Fewer coins are available for trading. That reduces sell pressure and makes the market more sensitive to new demand.” Validator Everstake stated.

Everstake clarified that 50.18% represents the total ETH held by the Ethereum PoS contract address, while the remaining 30% is active stake.

However, recent analysis by BeInCrypto does not rule out the possibility that ETH could decline further to $1,385 in the short term, amid the most negative market sentiment seen in years.

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Even if that scenario unfolds, on-chain data suggests that large investors and institutions continue to position for a long-term recovery.

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Crypto World

Aave V3 Avoided Unrecovered Bad Debt From 2023 to 2025: Study

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Aave V3 Avoided Unrecovered Bad Debt From 2023 to 2025: Study

A Bank of Canada staff paper found that Aave V3 reported zero non-performing loans in 2024, with overcollateralization and automated liquidations helping prevent lender losses in its Ethereum lending market.

Using transaction-level data from Jan. 27, 2023, to May 6, 2025, the study found that positions were typically liquidated before collateral values fell below outstanding debt, helping contain lender losses across the sample.

But the model came with a tradeoff, the paper said. While it protected lenders from unrecovered losses, it also shifted risk onto borrowers and constrained capital efficiency compared with traditional lending systems.

According to the paper, Aave V3’s design relies on automated risk controls rather than traditional underwriting, requiring borrowers to post more collateral than they borrow and liquidating positions when they breach risk thresholds.

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Daily lending earnings, circulating supply, and borrowing volumes (USD) on Aave V3. Source: Bank of Canada

Recursive leverage fueled borrowing demand

According to the paper, Aave V3’s lending activity was not driven solely by users seeking liquidity. It found that recursive leverage accounted for over 20% of total borrowed volume and 8.2% of borrowing transactions during the sample period. 

Recursive leverage involves repeatedly borrowing against collateral, redeploying the borrowed assets as new collateral and borrowing again to amplify exposure.

Related: Aave V4 goes live on Ethereum after governance vote clears rollout

The study said the dynamic made borrowers more exposed when markets turned. According to the paper, liquidations on Aave V3 tended to occur in concentrated waves, with four assets accounting for 90% of total liquidated value. 

This includes Wrapped Ether (WETH), Wrapped Staked Ether (wstETH), Wrapped Bitcoin (WBTC) and Wrapped eETH (weETH).

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The paper estimated that borrower losses during major liquidation events could be significant. It said liquidation fees typically ranged from 5% to 10% of liquidated value, while missed gains from subsequent price recoveries pushed combined losses to about 10% to 30% in some cases. 

The staff paper suggested that while the design for Aave V3 helped prevent unrecovered bad debt in the sample, it did so by exposing borrowers to abrupt losses when collateral prices fell sharply. 

Cointelegraph reached out to Aave for comment but did not receive a response before publication.

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