The cryptocurrency market is experiencing turbulence once again, with Ethereum’s price plunging below the $3,000 mark. The decline began as ETH struggled to maintain support at around $3,200, ultimately hitting a low of approximately $2,910. This marked a significant fall of over 5% within a brief period, intensified by persistent selling pressure across the broader market.
With the price now trading beneath its 100-hour simple moving average, technical indicators suggest a bearish trend is establishing itself. The immediate resistance level to monitor is set at $3,020, where a newly formed bearish trendline on the hourly chart serves as a critical barrier for Ethereum bulls.
As Ethereum descended from a swing high of $3,367 to the recent low, it encountered a series of critical support levels that it failed to defend, including $3,150 and $3,120. The current price dynamics illustrate ETH struggling below the 23.6% Fibonacci retracement level, leaving traders focused on the $2,880 region as a pivotal support area.
Market analysts have been observing vital patterns closely. If the bulls succeed in holding the $2,880 level, it could pave the way for a potential recovery. However, should ETH break above $3,020, the price could aim toward further resistance at $3,080 and later $3,120, with a move above $3,120 indicating a surge towards $3,150, which aligns with the 50% Fibonacci retracement of the recent decline.
ETF Outflows Reflecting Investor Sentiment
The sentiment surrounding Ethereum has been further dampened by notable outflows from the Bitwise Ethereum Strategy ETF, recorded on January 16, where investors withdrew approximately $949,375 in a single day. This significant pullback translates to 11.1% of the fund’s total assets under management, which now amount to approximately $8.54 million.
This sharp drop in assets could indicate a broader withdrawal from crypto exposure as concerns about the market’s recent performance escalate. It’s a trend mirrored in Bitcoin, which has seen its own decline of roughly 16.24% over the past three months, currently trading around $90,933. The impact of Bitcoin’s volatility often reverberates throughout the cryptocurrency landscape, affecting sentiment across various tokens.
Monitoring Downside Risks
Looking ahead, the risk of further declines remains a pressing concern for Ethereum. Failure to breach the critical resistance level at $3,020 may lead to additional selling pressure, with initial support identified near $2,920.
Crucially, the first major support to watch is at $2,880. A decisive breach below this threshold could send Ethereum down to around $2,800, and persistent selling might further shave the price down to $2,750. The key support to keep in sight is at $2,650.
The prevailing technical environment suggests ETH is trading below significant moving averages, with one-day signals flashing sell indicators as market momentum remains subdued. In the weeks ahead, traders will be keen to see if major tokens can find some stability. The ability to maintain current support levels will be critical in determining whether this is merely a short-term pullback or the precursor to a more severe market correction.
