Ethereum, one of the leading cryptocurrencies, saw a significant drop in price to a nearly five-month low of around $2,300 on Monday morning in Asia. The decline was attributed to the announcement of trade tariffs by U.S. President Donald Trump on China, Canada, and Mexico over the weekend. The fear of a global trade war sparked a risk-off sentiment among investors, leading to a sell-off in the cryptocurrency market.
The overall altcoin market fell by 28% to nearly $1.07 trillion, with major altcoins like XRP, Solana, Dogecoin, and Cardano recording losses between 15-30% in the past day. Ethereum experienced its largest liquidation event in the past two years, with significant amounts liquidated from both long and short positions. The open interest in Ethereum’s futures market also saw a significant drop, indicating that traders are pulling back from leveraged positions due to market uncertainty.
Technical analysis of Ethereum’s price charts showed that the cryptocurrency had moved below the 50-day and 200-day moving averages, signaling a strong short-term bearish trend. The Aroon indicator indicated further potential losses in the coming days, although the Relative Strength Index suggested that selling pressure may be easing.
Despite the sharp sell-off, signs of dip buying emerged as investors withdrew large amounts of ETH from exchanges, indicating accumulation during the dip. Whales also began buying Ethereum following the price plunge, with one whale purchasing a significant amount of ETH after holding stablecoin DAI for nearly 2.5 years.
Analysts have mixed opinions on Ethereum’s price outlook, with some speculating a short-term bounce towards $2,700 driven by technical factors and temporary relief in market sentiment. However, without strong catalysts or fresh narratives, Ethereum may struggle to maintain its strength against Bitcoin. Analysts also identified key support levels that Ethereum must hold to sustain its trajectory within a potential rebound channel.
At the time of writing, Ethereum was still down 18.4%, trading at $2,541 per coin. The cryptocurrency market remains volatile, with uncertainty surrounding global trade tensions and market sentiment playing a significant role in price movements. Investors are advised to closely monitor developments and technical indicators to make informed decisions in this challenging market environment.