Ethereum (ETH) has experienced a substantial decline of over 11.75% in the past 24 hours, falling to around $1,900. This downturn marks the lowest trading price since October 2023, with intraday lows reaching $1,755. Multiple factors are contributing to this sharp drop, creating considerable concern among investors.
Contributing Factors to ETH Price Decline
- Growing fears of a US recession affecting overall market sentiment.
- Mass liquidations of long positions within the cryptocurrency market.
- Risks of liquidation for crypto loans secured by ETH.
- Bearish technical signals indicating a weakening market trend.
The Influence of Broader Economic Conditions
Ethereum’s price movements reflect similar trends in broader risk-on markets, with the combined market capitalization of cryptocurrencies dropping over 4.6% in tandem with declines in the US stock market.
Recent assessments from financial institutions such as JPMorgan have raised the probability of a US recession to 40% for 2025, citing extreme economic policies as contributing factors. Concurrently, Goldman Sachs also increased the likelihood of economic downturns.
Impact of DeFi Loans on Ether Selling Pressure
The cryptocurrency landscape has seen significant issues arising from decentralized finance (DeFi) loans. A recent example involves a $74 million loan collateralized with over $130 million in ETH, which faced liquidation risks as the price dipped below crucial support levels. This scenario exemplifies the fragility of DeFi structures in volatile markets.
Long Liquidations Accelerate ETH Downtrend
The past day has witnessed an impressive $240 million wiped from Ethereum positions, with long liquidations comprising 82% of that total. Forced sell-offs by traders who had bet on price increases only exacerbated the downward trend, leading to further losses in ETH’s value.
Technical Analysis and Future Price Projections
From a technical standpoint, ETH is currently forming an inverse cup-and-handle pattern, signifying a potential loss of bullish momentum. Observations suggest that if current trends persist, Ethereum could see further declines, possibly approaching the $1,700 mark.
Conclusion
With the ongoing volatility influenced by macroeconomic pressures, DeFi dynamics, and technical indicators, Ethereum is facing considerable challenges. Investors are encouraged to remain vigilant, conduct thorough research, and understand the risks inherent in the volatile cryptocurrency landscape.
This article does not constitute investment advice. Readers should engage in their due diligence before making any financial decisions.
