In the dynamic world of cryptocurrency, Ethereum (ETH) has been mirroring Bitcoin’s (BTC) price movements amidst a broad market correction. With a substantial valuation of around $400 billion and an average daily trading volume nearing $32 billion, Ethereum’s price has experienced a notable decline of over 11% in the past three days, positioning itself at approximately $3,292 during the early New York session on Thursday, January 9.
This downturn has led to the liquidation of over $86 million from Ethereum’s leveraged market within the last 24 hours. The prevailing bearish sentiment is clearly reflected in the fear and greed index, which has dropped from 69% on Wednesday to 55% at the time of writing.
Major Factors That Caused Ethereum Price to Drop
The recent bearish sentiment surrounding Ethereum can be attributed to several factors, including reduced demand from large-scale investors and institutions. While Bitcoin’s availability on centralized exchanges continues to decrease, Ethereum’s presence has surged to 15.88 million in recent days.
On Wednesday, US spot Ether ETFs experienced a net cash outflow of approximately $159 million, with no inflows recorded, indicating suppressed demand. This trend coincided with the Ethereum Foundation’s sale of about 100 ETH, further influencing market dynamics.
Midterm Expectations
Crypto analyst Ali Martinez suggests that a potential decline to $2,900 for Ethereum could present a bullish opportunity. Such a drop could pave the way for a significant buy-the-dip moment, potentially targeting a price increase to $7,000. This scenario is supported by the formation of an inverted head and shoulders (H&S) pattern against the US dollar, hinting at a promising midterm target.
On the weekly chart, Ethereum has successfully broken out of a long-standing downward logarithmic trend, indicating a potential rally towards new all-time highs. This breakout serves as a promising indicator for investors looking to capitalize on Ethereum’s future growth as market conditions evolve.
In conclusion, while the current market sentiment may seem challenging, strategic analysis and timing could allow investors to leverage Ethereum’s price dip for substantial gains by 2025. As the cryptocurrency landscape continues to evolve, staying informed and prepared can make all the difference in optimizing investment outcomes.
