The cryptocurrency market is experiencing extremely high levels of volatility, with Ethereum (ETH) being a prime example. The price of Ethereum plummeted by 37% in response to Trump’s pro-tariff stance, only to skyrocket after Eric Trump showed support for ETH. These drastic fluctuations occurred within a span of just four days.
Significant Risks Involved
Despite a modest 15% increase since the election day opening, Ethereum is still trailing by 30% compared to its peak of $4,016 during the Trump rally. In recent days, ETH dropped below the support zone, falling under the $2,800 mark, a three-fold larger decrease than Bitcoin. Despite indicators like RSI signaling oversold conditions and OBV indicating some positive momentum, the sharp decline eroded more than 14% of its gains, putting 6.18 million addresses in the negative.
The major catalyst behind this downturn was Trump’s stringent economic policies, which led to the largest 24-hour crypto liquidation ever, resulting in a massive $10 billion loss in one fell swoop. This downward trend extended further as the ETH/BTC pair hit a four-year low, experiencing daily drops exceeding 3%. The lack of substantial capital flowing from Bitcoin into Ethereum has further clouded Ethereum’s future price trajectory.
Meanwhile, mid-cap cryptocurrencies are outperforming, with DEXE leading the pack with a 44% surge. Investors are pivoting away from large-cap assets, either exiting the market cycle or reallocating funds to smaller digital assets.
So, the question remains: Is Ethereum’s recent decline just a temporary setback, or will the dwindling confidence impede its ability to breach the $4,000 resistance level?
Unfolding Potential Future for Ethereum
ETH exchange-traded funds (ETFs) have been on a bullish streak, recording gains for four consecutive days and seeing a record $307.8 million in inflows within a single day, the highest for the year. Notably, Blackrock’s ETHA alone attracted a significant $276.2 million.
This institutional buying pressure is crucial in preventing ETH’s price from dropping below $2,745. If Ethereum were to dip to this level, approximately 4.26 million ETH could face losses, potentially triggering an $11 billion selloff, an impending situation worth monitoring closely in the days ahead.
Given the current absence of a robust market recovery, concerns about inflation, and a cooling investor sentiment towards Ethereum amidst this tumultuous period, a failure in ETF inflows could spell a further 15% decline from last year’s election day rally for ETH.
Breaking the $4,000 barrier will require a shift in the prevailing conditions outlined above. Until then, it’s advisable to brace for continued volatility as the stakes for Ethereum remain elevated.