ETH falls to 13-month low on Zcash bug news and Bitcoin drop to sub-$60K: Is $1.4K next?

Key takeaways:

• Ether derivatives metrics flip to a heavy bearish bias arsenic cascading liquidations chopped disconnected a alleviation bounce. 
• A captious ZCash bug discovered by AI triggers wide fears of contagion, driving a contraction successful Ethereum TVL.

Ether (ETH) plummeted to a 13-month debased of $1,540 connected Friday, pursuing the bearish inclination crossed the broader cryptocurrency market. Traders present fearfulness a deeper terms correction, fixed weakness successful ETH derivatives metrics and heightened hazard aft a bug was recovered successful the Zcash blockchain.

ETH perpetual futures annualized backing rate. Source: Laevitas

The Ether futures annualized backing complaint flipped antagonistic connected Friday, indicating accrued request for abbreviated positions. Even with ETH trading 67% beneath its all-time precocious from August 2025, assurance among bulls has been shattered aft $1.28 cardinal successful leveraged longs were liquidated implicit 5 days.

ETH options premium put-to-call ratio astatine Deribit. Source: Laevitas

Demand for downside terms extortion surged arsenic the Deribit ETH options put-to-call premium spiked to 3.7 times connected Friday. The indicator has consistently shown excess request for enactment (sell) options since Monday. Low condemnation among holders fuels uncertainty, giving bears an casual way to instrumentality control.

ETH terms followed Zcash: Why?

The terrible diminution successful Ethereum web Total Value Locked (TVL) to its lowest since February 2024 has besides negatively impacted trader sentiment. Smaller deposits successful decentralized applications (DApps) thin to trim ecosystem revenue, yet reducing request for ETH usage successful astute contracts.

Ethereum web DApps Total Value Locked, USD. Source: DefiLlama

Some of Ethereum's apical DApps experienced terrible TVL contractions, including Spark (-50%), Ether.fi (-49%), EigenCloud (-41%), and KernelDAO (-39%). Part of the exodus from astute contracts tin beryllium attributed to a captious vulnerability allowing unlimited ZEC minting successful the largest ZCash zero-knowledge pool. The bug was recovered connected May 29 utilizing the Opus 4.8 AI exemplary from Anthropic.

Given that the ZCash bug had existed since 2022 without anyone ever detecting it, traders fearfulness that different blockchains and astute contracts could besides beryllium astatine risk. Advances successful AI-driven information nonaccomplishment detection person enactment investors connected precocious alert, particularly aft cryptocurrency hacks totaled $630 cardinal successful April.

KelpDAO’s $293 cardinal hack and Drift Protocol’s $280 cardinal exploit accounted for 82% of the monthly losses crossed 25 protocols, triggering panic crossed the decentralized concern (DeFi) industry. The hacks occurred crossed aggregate networks, including Ethereum, Solana, Base, BNB Chain, Sui and PulseChain.

Percent of ETH proviso successful nett since they past moved. Source: Glassnode

Currently, lone 30% of the ETH proviso is profitable comparative to erstwhile those coins were past moved. This setup has occurred lone a fewer times successful history, with the astir caller lawsuit being the mid-March 2020 COVID crash. Prior to that, this beardown bargain awesome besides emerged successful mid-December 2019, preceding a 118% rally wrong 60 days.

Related: FG Nexus offloads further $17.8M Ether arsenic losses apical $100M

With implicit $500 cardinal successful leveraged ETH agelong positions liquidated successful 48 hours, determination are nary signs of a alleviation bounce. The largest Ethereum treasury firm, Bitmine (BMNR US), is sitting connected an unprecedented $10.5 cardinal unrealized loss, arsenic the institution holds 4.5% of the full ETH supply.

ETH could descent further beneath $1,550 arsenic capitalist assurance deteriorates pursuing aggregate hacks crossed the DeFi manufacture and the inflationary bug recovered successful the shielded Zcash protocol.