The cryptocurrency market is currently facing tumultuous times, with Ethereum (ETH) recently experiencing a dramatic price drop, falling over 10% within a 24-hour span. The digital asset broke through crucial support at $2,900, ultimately slipping below the $3,000 threshold and reaching a low of $2,738.
This swift descent has not only affected the price but also triggered a wave of liquidations amounting to $500 million in long positions, as stop-loss orders surged during the downturn. A staggering $158 million in Ethereum-related contracts were liquidated, with $140 million representing long contracts, indicating a significant loss of confidence among bullish investors.
Trading volume witnessed a striking 200% increase, hitting $33.2 billion as the wider cryptocurrency market echoed similar losses and marked a decline of 6.98% in the same timeframe. Major digital assets such as Bitcoin, SOL, XRP, and DOGE mirrored Ethereum’s downward trajectory, contributing to a broader market slump observed over the last month.
This crash comes after Ethereum’s completion of the Fusaka upgrade on December 3, which aimed to enhance Layer 2 transaction capabilities and overall network scalability. However, this development has seemingly failed to buoy prices in the short term. Market volatility has intensified, wiping out roughly $200 billion from the total market capitalization during the chaos.
Fusaka Upgrade and Market Resilience
Despite the downturn, BitMine Immersion Technologies seized the opportunity to increase its Ethereum holdings significantly, adding 96,798 ETH during this tumultuous period. This investment counters the trend of many market participants, as most companies have been slashing their exposure to digital assets amid the current bearish environment.
Technical Indicators Signal Caution
As of now, Ethereum trades at $2,738, with the MACD indicator highlighting negative divergence, suggesting the possibility of sustained bearish momentum. The recent relative strength index (RSI) reading of 32 places Ethereum in deeply oversold territory, which, while indicative of immense selling pressure, also leaves room for potential recovery.
Key support levels have emerged at $2,700 and $2,500. If Ethereum fails to maintain these levels, further downward pressure could ensue. Conversely, a recovery from these positions might see the price attempt to reclaim ground toward $2,900 and potentially back to the psychological $3,000 mark. A breakout above $2,900 could hint at a bullish reversal, while any drop below $2,500 could spark intensified selling.
Interestingly, even as liquidations surged, the derivatives market remains active, with Ethereum’s Open Interest rising by $654 million, reflecting a 4.3% increase despite the adverse price movement. This uptick suggests speculative interest is strengthening as traders assess potential recovery scenarios.
With high levels of Open Interest typically come increased price volatility. Thus, traders and market participants should proceed with caution, as significant leverage among participants may lead to drastic price swings going forward.
