Ethereum Price Crash: What’s Behind the Decline

Ethereum’s price has plummeted, making it the worst-performing blue-chip cryptocurrency in February. The cryptocurrency dropped to a low of $2,075, its lowest level since January 2024 and approximately 50% below its highest level in November 2023.

Seasonality and Market Performance

This ongoing decline has broken Ethereum’s six-year track record, marking the first February decline for the cryptocurrency since 2018 and its worst February performance on record. In comparison, Bitcoin has fallen by 25% from its highest level this year, while Ripple is down around 40% in the same period.

Outflows and Market Share Losses

Ethereum’s decline can be partly attributed to ongoing outflows in the exchange-traded fund. All spot Ethereum ETFs have seen asset losses for six consecutive days, bringing cumulative assets in these funds to $2.86 billion. Similarly, spot Bitcoin ETFs have shed over $4 billion worth of assets.

Additionally, Ethereum has struggled as it continues to lose market share to other layer-1 and layer-2 projects. The most notable competitors include layer-1 networks like Solana and BNB Smart Chain, as well as layer-2 networks such as Base and Arbitrum.

Market Fear and Technical Analysis

The broader crypto market fear has also contributed to Ethereum’s downturn, with the Fear & Greed Index dropping to 33. Ethereum’s price has continued crashing, forming a death cross – a bearish technical pattern that occurs when the 200-day moving average crosses below the 50-day moving average.

The cryptocurrency has also lost the key support level at $2,150, which previously marked the lowest swing in August and September 2023. This price served as the neckline of the triple-top pattern at $4,000.

Downward Momentum and Potential Crash

The Average Directional Index has risen to 40, indicating that downward momentum is strengthening. Given that the distance between the triple-top pattern and the neckline at $2,150 is 47%, applying the same measure downward suggests that Ethereum’s price could crash to $1,095.

Tips for investors:

  • Monitor Ethereum’s price movements and adjust your investment strategy accordingly.
  • Consider diversifying your portfolio to minimize losses.
  • Keep an eye on market trends and technical analysis to make informed investment decisions.

Stay up-to-date with the latest cryptocurrency news and market trends on Global Crypto News.

Post Views: 1