In the wake of Bitcoin’s tumble below the $96,000 threshold, Ethereum, the second-largest cryptocurrency by market capitalisation, has also taken a hit, slipping under $3,500, a significant psychological barrier. Despite Bitcoin’s market cap dipping under $2 trillion, Ethereum is still clinging onto its $400 billion valuation, an indication that the altcoin has some resilience in the face of market volatility.
With the crypto market awash in red, Ethereum is holding onto the $3,400 support level. But the question that is making rounds is whether sellers will break this level and push for a retest of the $3,000 mark.
In the past week, Ethereum has seen a 12.44% decline, a clear reflection of the severe market correction underway. The daily price trend of Ethereum exhibits three consecutive bearish candles, which began after Ethereum encountered rejection at the $4,100 mark. The infamous triple black crow pattern has seen Ethereum breach the 50-day EMA line, a bearish signal.
The price has reached the 78.60% Fibonacci retracement level at $3,553. As the downtrend continues, Ethereum is testing the $3,400 level, with the current market price standing at $3,404.
The daily RSI has slipped below the midway point and is edging towards the oversold boundary, indicating that selling pressure is mounting.
In the meantime, Ethereum ETFs are also taking a hit, with a significant outflow of $60.47 million. Grayscale, a major player in the crypto space, offloaded $58.13 million worth of Ethereum, leading the bearish charge. This increase in selling pressure has put a halt to the bullish trend in the Ethereum ETF market.
Interestingly, as Ethereum’s price volatility increases, ETH tokens are selling at discounted prices. World Liberty Finance, a firm linked to Donald Trump, seized this opportunity and invested $2.5 million in 722 ETH tokens.
However, despite the bullish outlook from Trump’s firm, the wider market is seeing a bearish swing from whales. Owing to the recent price drop, these large holders are selling off to repay debts. A recent activity saw a whale deposit 22,746 ETH tokens, worth $77.7 million, to Binance. Another whale deposited 31,968 ETH tokens, worth $122 million, over the past two days.
To conclude, with the wider crypto market turning bearish, Ethereum is under increased selling pressure. This downtrend may gather momentum as institutional support and retail demand wane. The 200 EMA line at $3,035 is a crucial psychological support level. Beyond that, the 50% Fibonacci level at $2,942 could serve as a potential bounce-back zone. If the broader market manages to recover, Ethereum’s price could challenge the 78.60% Fibonacci level at $3,530.
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