In the volatile world of cryptocurrencies, Ethereum (ETH) has been mirroring Bitcoin’s (BTC) recent price fluctuations during the ongoing market correction. As a leading altcoin with a fully diluted valuation of approximately $400 billion and a 24-hour average trading volume of roughly $32 billion, Ethereum has experienced a significant price drop of over 11% in the past three days, positioning it at around $3,292 as of Thursday, January 9, in the early New York session.
This downturn has led to a substantial liquidation of more than $86 million from Ethereum’s leveraged market within the last 24 hours. The prevailing bearish mood is further highlighted by the decline in the fear and greed index, which has fallen to 55% from 69% just a day prior.
Major Factors Influencing the Ethereum Price Drop
The recent bearish sentiment surrounding Ethereum can be attributed to several key factors, particularly the waning interest from both whales and institutional investors. While Bitcoin’s supply on centralized exchanges is decreasing, Ethereum’s supply has risen to 15.88 million in the past few days.
On Wednesday, the U.S. spot Ether ETFs saw a net cash outflow of approximately $159 million. Interestingly, none of the U.S. spot Ether ETF issuers reported any net cash inflow that day, underscoring the decreased demand.
This reduced demand for Ether coincides with the Ethereum Foundation’s sale of around 100 ETH, marking a notable event influencing market dynamics.
Midterm Expectations for Ethereum
Despite the current bearish trend, crypto analyst Ali Martinez suggests that a potential drop to $2,900 could represent a highly bullish opportunity for Ethereum investors. This price level could create an optimal buy-the-dip scenario, with a target price of $7,000 in the future.
Moreover, Ethereum’s price against the U.S. dollar is expected to form an inverted head and shoulders (H&S) pattern, setting a midterm target of approximately $7,000.
On a broader scale, Ethereum’s price has already broken out of a long-term declining logarithmic trend on the weekly time frame. This breakout signals a potential midterm rally, with the prospect of reaching new all-time highs on the horizon.
As the market continues to evolve, investors are encouraged to stay informed and consider strategic opportunities that align with their financial goals. By understanding the factors driving Ethereum’s current price movements, they can make more informed decisions on how to potentially capitalize on future gains.
