On January 13, Ethereum (ETH) experienced a significant 8% drop, falling below the $3,200 mark. This sudden downturn has left investors concerned. Delve into the reasons behind this decline and its potential market implications here.
Written by Ariela - Last updated on 01/14/2025 at 21:27 by Ariela
The Ethereum price broke a critical threshold by dropping below its support at $3,200. In actuality, the ETH crypto asset reached its lowest level since November 2024.
Cryptocurrency analysts attribute this decline to a combination of technical factors and economic signals. According to CoinGlass, over 90 million euros in leveraged positions were liquidated in just 24 hours. A record within a two-week timeframe!
Ethereum futures also indicate a downward trend. For instance, the open interest hit a historical peak of 32 billion euros on January 7 before dropping to 28 billion on January 12. This decline suggests that many investors have opted to:
Since Ethereum’s transition to PoS, many expected deflation due to the transaction fee burn mechanism. However, crypto analyst Benjamin Cowen noted that the circulation of ETH has increased by 45,000 units per month, making the cryptocurrency an inflationary asset since early 2024.
“Demand is so low that supply has exceeded burns, which could worry long-term investors.”
While ETH’s total supply remains slightly lower than pre-merge levels, an extended drop in demand could reverse this trend, further impacting its price.
From a technical perspective, Ethereum seems to have established a new base around $3,000. However, if selling pressure persists, the next support level is at $2,800, coinciding with a “Fair Value Gap” identified for several weeks.
Nevertheless, some positive signs exist. A recovery above $3,000 could indicate a return of buyers, especially if the burn rate increases. Volatility remains high, providing opportunities but also significant risks for crypto investors.
The decline of Ethereum underscores the current fragility of the cryptocurrency market. Between inflationary pressures and bearish technical trends, the upcoming weeks are crucial for ETH’s future.
At the time of writing, Ethereum is trading at $3,180.
⚠️ This article is published for informational purposes and should not be considered as investment advice. Crypto-currency trading involves risk and it is important not to invest more than you can afford to lose.
InvestX is not responsible for the quality of the products or services presented on this page and shall not be held liable, directly or indirectly, for any damage or loss caused as a result of using any goods or services highlighted in this article. Investments related to crypto-assets are risky by nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.
Ariela is one of the main editors of the news shared daily on InvestX. With 8 years of experience in writing, she writes articles on the topics that mark the crypto market each day.
Risk Warning: Trading financial instruments and/or crypto-currencies involves high risks, including the risk of losing all or part of your investment, and may not be suitable for all investors. Crypto-currency prices are extremely volatile and can be affected by external factors such as financial, regulatory or political events. Trading on margin increases financial risk.
Before deciding to trade in financial instruments or crypto-currencies, you should be fully informed of the risks and fees associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and tolerance for risk, and seek professional advice if necessary.
Some of the partners featured on this site may not be regulated in your country. It is your responsibility to verify the compliance of these services with local regulations before using them.
