Key Insights
- The general crypto market took a hit over the last week, with Bitcoin crashing beneath the $100,000 mark.
- This crash caused a 7% decline for Ethereum towards the $3,000 zone.
- Ethereum is attempting to reclaim its 200-day EMA around $3,125 and could be on its way towards a rebound.
- Meanwhile, derivatives data and technical indicators show that the bears currently have the upper hand.
Ethereum is currently at one of the most crucial junctures, especially as the crypto market currently bleeds red.
The sellers are currently intensifying their selling pressure, and Ethereum could be dangerously close to breaking below some of the most crucial supports.
Could Ethereum crash further and test the previous $2.913 low or is there a hope for a rebound?
Here’s everything to know:
Crypto Market Woes Impact Ethereum
The crypto market suddenly flipped bearish over the last week, with Bitcoin crashing beneath the $100,000 zone.
A wave of liquidations swept across the market, taking upwards of $800 million from traders, especially the bulls.
This intense selling pressure took a toll on Ethereum, forcing it into a 6.8% drop between Sunday and Monday.
Ethereum has now dipped underneath the $3,200 zone and is testing the psychological $2,000 mark.
So far, many traders are wondering whether the ongoing bearish market conditions will continue through to 2025 and drag Ethereum even lower.
Ethereum Price Analysis
According to the 4-hour chart, Ethereum is currently in the middle of a pullback, after its failure to break above the local resistance trendline around $3,300.
The cryptocurrency consolidated briefly, before succumbing to the bearish pressure of the general market and entering a harsh downturn.
At the time of writing, Ethereum has normalized to the $3,119 price level, after dropping by around 7% over the last 24 hours.
Notably, Ethereum’s crash towards $3,000 became even harsher after the cryptocurrency lost the crucial $3,125 price level.
Ethereum is on its way to reclaiming this price level, and could be planning a comeback.
Derivatives Data Signals Potential Downside
The derivatives market reflects this ongoing bearish trend on Ethereum, with Coinglass data indicating a 2% drop in Ethereum’s Open Interest over the last day.
This metric remains strongly bullish in the long term though, considering its current standing of $31 billion—which is still an incredible step-up from November’s $13 billion.
Alongside the slight dip in open interest, the cryptocurrency’s long-short ratio has also decreased to around 0.87, while the weighted funding rate has dropped to 0.005%.
These figures show that optimism has waned somewhat for Ethereum, among investors.
This combination of price action and derivatives data shows that the bears are indeed stronger than the bulls.
A break below the $3,000 zone could lead to a stronger drop towards lower lows between $2,900 and $2,700.
Can Ethereum Reverse the Trend?
While the current outlook shows a strong bearish presence, Ethereum has a present, albeit slim chance for a recovery.
This said, a hold-out above the $3,023 zone could create a bullish divergence In the RSI.
This could signal to the bulls that the market is becoming healthy.
If the bulls return to their Ethereum positions and manage to cause a break and close above $3,125 (the 200-day EMA), Ethereum could push further upwards towards the local resistance trendline around $3,300.
However, the bears seem to have the upper hand for now, and traders should remain cautious as Ethereum attempts to stabilize.
