Reasons Why Ethereum Price Falling despite potential
- Ethereum price crashed to $2,000, its lowest in 16 months.
- Whale liquidations and $168M in ETH longs wiped out in 24 hours.
- If $2K support fails, ETH could drop to $1,540—or even $1,000.
Second-largest market capitalization cryptocurrency Ethereum price has dipped below the important $2,000 handle, touching its November 2023 levels. The steep fall, a 12.4% dip in 24 hours, has left eyebrows raised across the crypto community. But what caused the fall?
The latest price action comes on the heels of a fleeting bout of optimism after the previous President Donald Trump’s proposal of adding Ethereum to a proposed U.S. cryptocurrency reserve. While the news initially triggered a rally, euphoria proved short-lived amid prevalent market worry.
Some major reasons are responsible for Ethereum’s recent decline:
Macroeconomic uncertainty
Offshore markets are in disarray. Geopolitical tensions are increasing and fresh US tariff ideas have unleashed a wave of risk aversion. And, as has been the pattern in previous cycles of the market, crypto tokens, as riskier assets, are the first to absorb the shock.
Whale liquidations and exchange supply surges. On-chain data shows that the supply of Ethereum on centralized exchanges recently reached an all-time high of 16.2 million ETH over the last 12 months. Such a spike shows that large holders have been selling their holdings, which totals up to selling pressure. Over $160 million worth of ETH long positions were realized within a day, which intensified the price drop.
Bearish technical indicators
Technical analysis indicates Ethereum price has created a double-top pattern, a bearish indicator that will propel prices even lower if the $2,000 support is broken. Analysts are speculating about support levels of $1,540 and even lower to $1,000, with the more ominous predictions portending a plunge to $174 levels last seen in 2020.
Increased competition and network limitations
Ethereum is also under greater threat from more scalable and faster blockchains such as Solana. Layer-2 networks have also redirected traffic away from Ethereum’s mainnet, removing direct demand for ETH. Despite Ethereum moving to proof-of-stake, inflationary trends have seeped in with 0.37% supply growth since April 2024.
Despite the difficulties of today, the future of Ethereum looks bright with precautions. The exchanges’ reserves are once again dropping, which shows the shift toward long-term storage. Future network upgrades such as EIP-7781 are focused on scaling improvements and lowering ETH supply via more aggressive burning of fees.
Others opine that if the adoption is accelerated and Ethereum price recovers significant resistance levels like $2,800, it can bounce back strongly. Bullish estimates see Ethereum breaking to $7,000 by the fourth quarter of 2025. Although predicated on macroeconomic stability and increasing institutional investment.
In total, while Ethereum price has endured a rocky stretch driven by extrinsic market forces, technical letdowns. And increasing selling pressure, it is still well-rooted in the greater blockchain cosmos. Whether it rebounds or heads towards lower support levels is yet to be determined by future economic signals and investor sentiment.
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Reasons Why Ethereum Price Falling despite potential
- Ethereum price crashed to $2,000, its lowest in 16 months.
- Whale liquidations and $168M in ETH longs wiped out in 24 hours.
- If $2K support fails, ETH could drop to $1,540—or even $1,000.
Second-largest market capitalization cryptocurrency Ethereum price has dipped below the important $2,000 handle, touching its November 2023 levels. The steep fall, a 12.4% dip in 24 hours, has left eyebrows raised across the crypto community. But what caused the fall?
The latest price action comes on the heels of a fleeting bout of optimism after the previous President Donald Trump’s proposal of adding Ethereum to a proposed U.S. cryptocurrency reserve. While the news initially triggered a rally, euphoria proved short-lived amid prevalent market worry.
Some major reasons are responsible for Ethereum’s recent decline:
Macroeconomic uncertainty
Offshore markets are in disarray. Geopolitical tensions are increasing and fresh US tariff ideas have unleashed a wave of risk aversion. And, as has been the pattern in previous cycles of the market, crypto tokens, as riskier assets, are the first to absorb the shock.
Whale liquidations and exchange supply surges. On-chain data shows that the supply of Ethereum on centralized exchanges recently reached an all-time high of 16.2 million ETH over the last 12 months. Such a spike shows that large holders have been selling their holdings, which totals up to selling pressure. Over $160 million worth of ETH long positions were realized within a day, which intensified the price drop.
Bearish technical indicators
Technical analysis indicates Ethereum price has created a double-top pattern, a bearish indicator that will propel prices even lower if the $2,000 support is broken. Analysts are speculating about support levels of $1,540 and even lower to $1,000, with the more ominous predictions portending a plunge to $174 levels last seen in 2020.
Increased competition and network limitations
Ethereum is also under greater threat from more scalable and faster blockchains such as Solana. Layer-2 networks have also redirected traffic away from Ethereum’s mainnet, removing direct demand for ETH. Despite Ethereum moving to proof-of-stake, inflationary trends have seeped in with 0.37% supply growth since April 2024.
Despite the difficulties of today, the future of Ethereum looks bright with precautions. The exchanges’ reserves are once again dropping, which shows the shift toward long-term storage. Future network upgrades such as EIP-7781 are focused on scaling improvements and lowering ETH supply via more aggressive burning of fees.
Others opine that if the adoption is accelerated and Ethereum price recovers significant resistance levels like $2,800, it can bounce back strongly. Bullish estimates see Ethereum breaking to $7,000 by the fourth quarter of 2025. Although predicated on macroeconomic stability and increasing institutional investment.
In total, while Ethereum price has endured a rocky stretch driven by extrinsic market forces, technical letdowns. And increasing selling pressure, it is still well-rooted in the greater blockchain cosmos. Whether it rebounds or heads towards lower support levels is yet to be determined by future economic signals and investor sentiment.
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