Ethereum Faces Mounting Pressure as Price Dips Below $2,600 Amid Network Concerns
Ethereum (ETH) is experiencing significant downward pressure, trading at $2,556 as of the latest market data, marking a 2.3% decline over the past 24 hours. The second-largest cryptocurrency by market capitalization has seen a concerning 9% drop over the past three days, with technical indicators suggesting potential further downside.
Market Dynamics and Liquidations
The recent price action has triggered substantial liquidations across the cryptocurrency market, with Ethereum bearing the brunt of the selling pressure. Data from CoinGlass reveals that over $24 million in ETH leverage positions have been liquidated, with long positions accounting for $23.2 million of the total. This cascade of liquidations has contributed to the overall crypto market experiencing $122 million in position closures.
ETH/BTC Ratio Hits Critical Low
A particularly concerning development is Ethereum’s performance against Bitcoin. The ETH/BTC ratio has plummeted to 0.03856, marking a 42-month low not seen since April 2021. This represents a substantial 31.5% decline from recent highs, highlighting a clear preference among investors for Bitcoin over Ethereum in the current market environment.
ETH/USD Technical Analysis and Resistance Levels
The price action shows significant resistance around the $2,800 level, with Ethereum facing rejection after reaching $2,768. Market intelligence firm CryptoQuant has identified a potential “short-squeeze risk” due to increasing leverage ratios, suggesting that the futures market may be overheated.
Key technical levels include:
- Immediate resistance: $2,550-$2,600
- Critical resistance zone: $2,675 (100-day SMA)
- Support level: $2,450
- Major support: $2,420
Ethereum Network Fundamentals and Competition
Ethereum’s challenges extend beyond price action to network fundamentals. The network is grappling with:
- Average transaction fees of $4, pushing activity to competing chains
- A 13% decline in DEX volumes over the past week
- A 5% reduction in Total Value Locked (TVL) over the past month
- Net withdrawal of 191,000 ETH from staking (approximately $492 million)
Competing networks, particularly Solana, have seen increased activity, with Solana’s DEX volume surpassing Ethereum’s by 67% over the past week.
Future Outlook
The upcoming Prague-Electra upgrade, initially planned for Q1 2025, aims to address scalability issues through improvements like Verkle trees and EIP-7251. However, uncertainty around implementation timelines and effectiveness in addressing network congestion continues to weigh on investor sentiment.
Technical indicators suggest caution, with the MACD showing some bullish momentum while the RSI hovers near the 50 zone. The path to recovery would require clearing significant resistance levels at $2,550 and $2,600, while failure to maintain current support could see prices testing the $2,450 level.
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