The cryptocurrency market is experiencing its worst daily trend since the FTX cryptocurrency exchange collapse in November 2022, reflecting a massive global market long liquidation.
With Bitcoin prices dropping below the $50,000 mark, Ethereum prices have fallen to an eight-month low near $2,000.
However, as Bitcoin now targets a rebound to $60,000 with buyers beginning to dominate the market, Ethereum might also see a bullish recovery.
Sellers Initiate Liquidation Process
As ETH prices hold at the $2.1K level, the number of sell position liquidations surged after a brief $350 million long liquidation. Data from Coinglass shows that nearly $21 million in ETH was liquidated in the past four hours, with sellers liquidating positions worth around $14 million.
Ethereum’s 20% drop has significantly impacted DeFi protocols, resulting in over $350 million in liquidations in the past 24 hours. Several members of the crypto community on X expressed concern that if Ethereum’s price drops to around $1,700, it could cause multiple liquid staking tokens to depeg and put pressure on several DeFi protocols.
According to CoinShares, the net outflow of Ethereum ETFs amounted to $146 million, with the Grayscale Ethereum Trust (ETHE) seeing outflows that exceeded the inflows of other Ethereum ETFs.
As the market stabilizes near support levels, buyers’ interest in Ethereum seems to be consolidating around $2.1K. Coinglass data shows ETH’s funding rate is negative, indicating that sellers still maintain control.
IntoTheBlock data reveals that the number of addresses facing losses has doubled recently, jumping from 18 million to 36 million in just a week. This increase suggests growing concerns about potential mass liquidations as holders may lose patience, triggering further declines.
What’s Next for ETH Prices?
Ethereum prices have fallen to a low of $2.1K. However, a strong rebound in ETH prices has significantly thwarted further declines. Ethereum quickly surged above the 23.6% Fibonacci level, currently targeting a break above $2,500. As of this writing, ETH is priced at $2,411, down more than 12% in the past 24 hours.
On August 5, the sell-off intensified, pushing prices towards the psychological support level of $2,000. A slight bullish sentiment emerged as longs stepped in to buy the dip, evident from the long tails on the candlestick charts. ETH prices climbed above $2,500, but now face slight selling pressure.
The RSI has recovered from oversold conditions, currently trading at the 28 level, indicating a potential rebound. This could push the ETH/USDT pair back to the $2,800 breakout level.
However, if prices fail to reach $2,800, it suggests a lack of strong buying interest from bulls. This could increase the risk of prices falling below $2,000. Conversely, a break above $2.8K would enhance momentum and could push prices towards $3,200.
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