Current Ethereum Price:
- Short-term Ethereum holders have led the recent selling trend, incurring losses exceeding $500 million on Monday.
- Increased liquidations in the DeFi sector may accelerate ETH’s downturn and potentially trigger additional liquidations.
- If ETH breaches the lower limit of a descending channel, it might fall to $1,000.
Over the past 48 hours, Ethereum (ETH) experienced a dramatic decline of more than 27%, briefly reaching a two-year low of $1,410 before rebounding to the $1,500 mark on Monday. According to Coinglass data, this drop led to $257.87 million in liquidations across the derivatives market for ETH during the same timeframe.
Data from on-chain analytics indicates that many investors are capitulating, pushing ETH realized losses beyond $500 million. Recent selling primarily involves coins acquired within the last month, showcasing how short-term holders are reacting strongly to downward price fluctuations.
Additionally, coins that have been held for 1 to 2 years are also beginning to sell, although at a slower rate. An uptick in selling from this group could lead to a more pronounced decline in ETH, as much of the buy-the-dip activity has been directed to their addresses.
ETH transaction history by age. Source: Santiment
ETH Faces Increased Downward Pressure if DeFi Liquidations Persist
The rise in liquidations across DeFi platforms has contributed to the recent decline in ETH’s value.
Sky, which was previously known as Maker, liquidated the collateral of a large holder consisting of 53,074 ETH, valued at $74 million at that time.
Sky allows the creation and borrowing of the DAI stablecoin using ETH as collateral, automatically liquidating positions if the collateral’s value drops below a specific threshold.
Another significant holder, who has 220,000 ETH in collateral, added 10,000 ETH and 3.52 million DAI to decrease its liquidation price to $1,119, bearing the risk of losing all its collateral if ETH falls beneath this level.
Similar liquidation events have occurred on the lending platform Aave, which recorded over $162 million in liquidated collateral on Monday, as per @KARTOD’s Dune dashboard.
Ethereum Price Outlook: ETH Targets $1,000 Amid Rising Bearish Sentiment
Ethereum is currently navigating a support level around $1,522 after a brief rebound from the lower edge of a descending channel that has been in effect since December. The leading altcoin could see a further decline to the support level around $1,000 if it breaks below the channel’s lower boundary.
ETH/USDT daily price chart
On the upside, ETH may face resistance around the $1,800 mark, bolstered by a significant descending trendline.
The Moving Average Convergence Divergence (MACD) histogram indicates that bars are below the neutral level, while the Relative Strength Index (RSI) is in the oversold territory, suggesting prevailing bearish momentum but with potential for a shift.
Ethereum Frequently Asked Questions
Ethereum is a decentralized open-source blockchain that features smart contract functionality. Its native currency, Ether (ETH), is the second-largest cryptocurrency and the primary altcoin by market capitalization. The Ethereum network is designed for developing crypto solutions such as decentralized finance (DeFi), GameFi, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs), among others.
Ethereum is a public decentralized blockchain technology where developers can create and launch applications that operate without requiring a central authority. The network utilizes the Solidity programming language and the Ethereum virtual machine to facilitate the creation and deployment of applications with smart contract capabilities.
Smart contracts are publicly verifiable codes that automate agreements among two or more parties. Essentially, these codes self-execute specific actions when predetermined conditions are fulfilled.
Staking involves earning returns on idle crypto assets by locking them within a crypto protocol for a defined period, thereby contributing to its security. Ethereum transitioned from a Proof-of-Work (PoW) model to a Proof-of-Stake (PoS) consensus mechanism on September 15, 2022, in an event referred to as “The Merge.” This change was a crucial step in Ethereum’s roadmap aimed at achieving enhanced scalability, decentralization, and security while remaining sustainable. Unlike PoW, which necessitates costly hardware, PoS lowers the entry threshold for validators by utilizing crypto tokens as the foundation of its consensus mechanism.
Gas serves as the unit of account for transaction fees users pay when executing transactions on Ethereum. During times of network congestion, gas fees can spike significantly, leading validators to prioritize transactions based on their fees.