The cryptocurrency landscape witnessed a significant downturn as Ethereum (ETH) fell below the $3,000 mark, trading around $2,900 to $2,950—a decline of approximately 5-7% in just 24 hours. This drop marks a challenging period for the second-largest cryptocurrency, whose market valuation has plummeted toward the mid-$340 billion range.
Amid a broader liquidation event, nearly $600 million in leveraged positions across the crypto market were wiped out in a single day, contributing to Ethereum’s slip of about 6.9% to roughly $2,904. This retreat continued a bearish trend that began in late November after ETH lost its critical support level at $3,590, provoking a surge in selling volume by 138%.
As Ethereum’s prospects dimmed, Bitcoin also faced a downturn, exacerbating the selling pressure due to their historical correlation. In just one day, liquidations for Ethereum reached $104.9 million, with $73.6 million stemming from long positions.
Network Activity at Multi-Month Lows
December has seen a stark reduction in weekly active addresses on the Ethereum network, plummeting from 440,000 to just 324,000. This signifies the lowest levels of engagement since May, suggesting that many investors may be opting to sidestep the volatile market. Additionally, transaction counts have dropped to levels not seen since July, highlighting a trend of waning interest.
This decline in active addresses usually indicates a decrease in demand for the network, resulting in a potential continuation of sideways or downward price movements until user engagement rebounds.
Adding to Ethereum’s woes, US spot Ethereum exchange-traded funds have experienced three consecutive days of outflows, totaling $224.78 million, driving total net assets down from $21.43 billion to $18.27 billion since December 10.
US Selling Pressure Resurfaces
The Coinbase Premium Index has recently flipped negative, revealing that selling pressure from US-based investors has returned to the forefront of market activity. This index, which compares Ethereum prices across exchanges, suggests a shift in trading dynamics correlating with recent labor market reports indicating an uptick in unemployment to 4.6%, the highest since September 2021.
As the economic landscape shifts, traders are keeping an eye on the $2,820 to $2,830 zone, a level that has historically served as a support range. Despite short-term hopeful signs indicated by the on-chain MVRV deviation bands, which show some buyers view current prices as attractive, broader market indicators remain perilous.
Ethereum continues to trade below its 100-hour simple moving average, and bearish trends have limited recovery attempts near the $3,120 mark. Currently, ETH shows some support at $2,850 but faces formidable resistance at $2,980, and further at $3,050 and $3,120.
Failure to reclaim the $2,980 to $3,000 range could expose ETH to further declines, with downside targets potentially setting sights on $2,920 and even $2,880-$2,840. A serious breach of $2,850 might invite a fall into the $2,400-$2,600 range, heightening the urgency among traders.
Technical analysis paints a grim picture for Ethereum’s prospects. Indicators show bearish momentum persisting within hourly timeframes, with the MACD on ETH/USD gaining negative momentum while the RSI remains firmly below 50, signifying continued seller control.
However, the Stochastic Oscillator’s recent dip into oversold territory offers a glimmer of hope for a potential short-term bounce, although the overarching trend appears to be on a downturn. As Ethereum navigates these tumultuous waters, market participants remain vigilant for signs of stabilization or further capitulation.
