Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Ethereum (ETH) is facing a heightened risk of falling below the $3,000 mark, according to recent market analysis, following a significant crypto-wide liquidation event last week. The digital asset, currently trading near $3,730, has shown technical signs of weakening momentum, prompting concerns among investors about a potential deeper correction in its price.
Market Liquidation Impacts Ethereum
Last week’s market turbulence resulted in over $1.02 billion liquidated across the broader cryptocurrency market, affecting nearly 310,000 traders. Ethereum alone accounted for more than $269 million in forced position closures, making it the second-highest contributor to liquidations after Bitcoin.
While this event successfully flushed out excessive leverage, it simultaneously damaged Ethereum’s short-term market structure, leaving it vulnerable to further declines.
Technical Indicators Signal Weakness
From a technical perspective, Ethereum appears to be losing momentum, having failed to surmount the $4,200 resistance level. The asset has since reversed course, trading below its 100-day moving average for the first time in months.
The 200-day moving average, currently holding around $3,500, represents the next critical dynamic support level. A breach of this level could trigger a more protracted downtrend, with $3,000 identified as the next reasonable target.
Bearish Sentiment and Institutional De-risking
The Relative Strength Index (RSI) has dropped below 40, indicating strong bearish momentum and a notable lack of buying interest. This trend is further supported by recent trading volumes, which show significant sell-side dominance.
This suggests that institutions and whales may be reducing their risk exposure in anticipation of increased market volatility. The shift in sentiment was largely attributed to Friday’s market crash, reportedly triggered by a significant Bitcoin price rejection, which sent ripple effects across the altcoin market.
Ethereum’s concentrated leveraged long positions were particularly exacerbated during this period, intensifying its price collapse.
Outlook
Despite the possibility of brief recoveries above $3,500, the prevailing market tone remains defensive. Unless buying pressure rapidly intensifies, analysis suggests Ethereum is likely to test the $3,000 level, a move that could redefine its midterm trend and signal a potential pause in its recent bull run.
