Ethereum plummets over 10% in 24 hours, breaking below the crucial $3,000 mark amid leverage liquidations and whale activity. On-chain indicators paint a worrisome picture. Is this current dip just the start of a deeper bearish trend?
Ethereum is currently experiencing one of its most volatile phases in recent months. The second-largest cryptocurrency by market capitalization has plunged below the critical threshold of $3,000, reaching levels around $2,850 according to the latest market data. This sharp drop occurs within a broader context of widespread sell-off affecting all risk assets, from tech stocks to cryptocurrencies, as investors reassess their positions amid valuations deemed excessive.
The current price action reflects more than a simple technical correction. Ethereum now displays a weekly decline exceeding 15% and is trading more than 45% below its all-time high recorded last August. This rapid deterioration of bullish momentum raises legitimate questions about the market’s ability to sustain current levels.
What distinguishes this correction from previous ones is the extraordinary scale of leveraged position liquidations. Nearly $150 million in long positions were automatically closed within just 24 hours. These forced liquidations create a particularly destructive domino effect: each wave of automatic closures pushes prices lower, triggering new liquidations, and so on.
Perpetual futures contracts, heavily used by traders to amplify their market exposure, transform into a double-edged sword during bearish phases. Order book depth thins considerably, making each price movement more violent and unpredictable. Market makers withdraw, further aggravating the ambient volatility.
From a technical standpoint, Ethereum is currently evolving within a descending wedge pattern, a chart formation that could theoretically precede a bullish reversal. The lower boundary of this structure sits around $2,930, a level tested multiple times in recent days. However, the sideways consolidation window is tightening dangerously, forcing the market toward an imminent resolution.
Key resistance levels to watch are situated at $3,000 and $3,200. A solid reclaim of these zones would be necessary to invalidate the bearish scenario. Conversely, a clear break below $2,650 would open the path toward the next major support at $2,500, or even lower at $2,200.
The MVRV Extreme Deviation Pricing Bands chart shows that Ethereum is at a critical threshold for maintaining a medium-term bullish structure. A drop below $2,600 would not bode well for the coming months. Others see this as a dollar-cost averaging opportunity.
On-chain data adds an additional layer of concern to the already deteriorated technical picture. Large whales holding between 1 million and 10 million ETH, who traditionally constituted the buyer base during corrections, have abruptly stopped accumulating. This behavioral change betrays waning confidence in near-term rebound prospects.
The MVRV Long/Short ratio, a key indicator of relative profitability among different investor cohorts, has fallen to its lowest level in four months. This metric suggests that long-term holders are seeing their paper gains rapidly melt away. If this category of investors, generally considered “strong hands,” begins taking profits to secure what remains of their gains, a new downward leg could kick in.
The macroeconomic context doesn’t help either. Investors are massively fleeing risk assets, particularly in the technology and AI sector where concerns about aggressive spending and stratospheric valuations are intensifying. Cryptocurrencies, still correlated with tech stocks, are bearing the full brunt of this risk-off movement.
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Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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