Ethereum’s price faced a substantial setback this week, plummeting by 10% after failing to breach the formidable $3,050 resistance barrier. This downward momentum saw the cryptocurrency touch a low of $2,680 before slightly recovering to the current trading range of around $2,730.
The recent decline stems from a significant rejection at the $3,050 mark, leading ETH to fall below the crucial $2,820 support level and subsequently sliding past $2,750. Now, Ethereum finds itself trading under the $2,800 threshold and beneath the 100-hour Simple Moving Average, with a steep bearish trend line forming resistance at $2,820.
In the past 24 hours, a staggering $416.8 million in Ethereum liquidations was recorded. Notably, long positions accounted for $391 million of that total, according to data sourced from Coinglass. In light of these events, bulls have been fiercely defending the $2,700 support level; although the price briefly dipped below this point, it has managed to recover somewhat.
Currently, the 23.6% Fibonacci retracement level from the recent decline offers minimal support, as traders remain cautious about further downward pressure.
The DAO Security Fund Initiative
This week also witnessed the launch of The DAO Security Fund, announced by developer Griff Green. The initiative plans to utilize over $200 million in unclaimed funds from the infamous 2016 DAO hack to bolster Ethereum’s security efforts.
Originally intended as restitution for the victims of the 2016 exploit, these funds have appreciated significantly, evolving from an initial $6 million to over $200 million today. The fund aims to enhance security across the Ethereum ecosystem, focusing on wallet user experience, incident response, Layer 2 solutions, and core protocol security.
Guided by the Ethereum Foundation’s “Trillion Dollar Security” initiative, funding will be distributed through mechanisms such as quadratic funding, retroactive funding, and rank-choice voting, providing a modern approach to financial support in the decentralized world.
Technical Outlook
From a technical perspective, Ethereum faces immediate resistance at the $2,765 mark, followed closely by the critical $2,820 level aligned with the bearish trend line. A decisive breakthrough above $2,860 could propel prices toward $2,900 and potentially $3,000.
However, if bulls fail to sustain the $2,700 support, the next target could fall at $2,680. A breach below this level may lead Ethereum to test $2,625, a previous support level from November’s downturn. Further downside risks could see prices dropping to $2,550 and $2,500 if bearish pressures continue.
Currently, the Relative Strength Index is trending downward below neutral levels, while the Stochastic Oscillator reveals an oversold condition, highlighting strong bearish momentum but also hinting at a potential short-term reversal.
The fund will allocate a substantial amount of 70,500 ETH from an Extrabalance contract, alongside 4,600 ETH from DAO and ETH tokens, with notable curators including Ethereum co-founder Vitalik Buterin and industry leaders from MetaMask and Dappnode.
The 2016 DAO incident remains a significant historical reference for Ethereum, resulting in a hard fork that created Ethereum Classic amidst discussions of security and governance that continue to shape the blockchain’s landscape today.
