Ethereum ($ETH) has recently experienced a significant drop below the crucial $4,000 support level, sparking concerns among investors about the short-term trajectory of the Ethereum price. Various factors, including macroeconomic uncertainty, slowing ETF inflows, and low exchange liquidity, are contributing to the recent downturn in Ethereum’s value.
Ethereum Liquidation Heatmap
Coinglass data reveals that in the last hour, $100 million worth of Ethereum long positions were liquidated. One whale trader, identified as 0xa523, suffered a loss of $36.4 million on 9,152 $ETH, bringing their total losses to over $45.3 million. This incident serves as a stark reminder of the risks associated with leveraged trading in volatile markets. The surge in daily ETH long liquidations exceeding $500 million has added further pressure on the market, leading to intensified price fluctuations.
Slowing ETH ETF Inflows
Despite initial enthusiasm surrounding institutional purchases and ETF inflows, Ethereum’s momentum has waned in recent weeks. Data indicates a significant slowdown in Ethereum ETF inflows, with $79.4 million in net outflows recorded on September 24, contrasting with the $241 million net inflows for BTC ETFs. This trend suggests that institutional investors are exercising caution towards Ethereum at present, exerting downward pressure on its price.
Weak Institutional Demand
Notably, large investors have been pulling back from Ethereum, as evidenced by Grayscale’s sale of $53,810,000 in Ethereum on Coinbase. This move signifies a lack of interest from institutional players in acquiring $ETH at the current juncture. Additionally, Ethereum supply on exchanges has dwindled to a nine-year low of just 14.8 million tokens, a development that has coincided with the ongoing price decline. Reduced on-chain activity and lower gas fees further indicate a decline in market participation and user confidence.
Ethereum Dominance Declining
Ethereum’s market dominance has dropped from 14.6% to 12.8%, signaling a loss of relative significance in the crypto market. Analysts warn that if this trend persists, Ethereum could underperform altcoins by up to 45%, highlighting the diminishing momentum of Ethereum’s earlier rally this year.
How Low Can ETH Price Go?
According to analyst TED, the repeated testing of the $4,060 support level within a short span of three days suggests strong selling pressure on ETH/USD. Analysts are now eyeing the next support zone around $3,800, which could serve as a potential accumulation point for long-term investors. The daily Relative Strength Index (RSI) currently stands at 35, indicating oversold conditions for Ethereum without immediate rebound momentum. These technical signals, coupled with substantial derivatives liquidations, point towards a potential further decline before any potential recovery.
In conclusion, while the recent price drop in Ethereum may appear concerning, it also presents an opportunity for long-term investors to accumulate $ETH at potentially lower prices before a market turnaround. Stay informed on the latest developments in the crypto world to make informed decisions and navigate the evolving landscape of digital assets effectively.