Ethereum Price Drop Analysis

Ethereum tumbled 15% to $2,000 as whales unloaded their holdings, despite its inclusion in strategic reserves. The question now arises: is a drop to $1,900 a real possibility?

Price Action Breakdown

Ethereum’s [ETH] price action turned brutal as it plummeted 15% to $2,000, reaching its lowest level since November. This breakdown shattered key support levels as sell-offs driven by whales erased all post-election gains.

Even the anticipated boost from Ethereum’s inclusion in strategic reserves failed to stem the outflows, with ETH ETFs losing $51.36 million. Elevated sell-side liquidity and extreme fear dominate the market, making it challenging to defend key price levels. If bulls fail to hold this line, a further drop to $1,900 seems increasingly likely.

Internal and External Factors Under Focus

After Donald Trump’s tweet discussing a potential strategic reserve, the crypto market cap surged 8%, briefly reclaiming the $3 trillion mark. However, at press time, it had retraced significantly, dropping 10.20% to $2.78 trillion, with $220 billion wiped out in just 24 hours. The market volatility remains exceptionally high.

In such a climate, an immediate rebound for Ethereum seems unlikely. Nevertheless, the recent 15% decline has pushed prices into a key demand zone, potentially creating an accumulation opportunity for those looking to buy at a discount. However, on-chain metrics indicate weak buyer interest.

The Coinbase Premium Index (CPI) remains negative, signaling a lack of U.S. institutional demand. Rising Ethereum exchange reserves coupled with a 5.50% drop in trading volume point towards sustained sell pressure. Without dip-buying, Ethereum faces a high likelihood of further downside movements. Unless conditions shift or some demand-supply equilibrium triggers consolidation, a drop to $1,900 appears probable.

Ethereum Crash: Liquidity Concerns and Market Sentiment

The sell-off intensified as $168.13 million in long liquidations were triggered, coinciding with a rise in sell-side liquidity. This occurred just a day after a market influx of $2 billion into new positions, driving Open Interest (OI) up 10% to $21.11 billion.

The rapid de-leveraging was marked by an 8.39% drop in OI, intensifying volatility as futures traders aggressively closed their positions, either to mitigate losses or secure gains.

With thinning market liquidity and intensified sell-offs, Ethereum remains vulnerable to further declines unless demand can induce a supply shock. Beyond on-chain metrics, broader market sentiment plays a crucial role. If Bitcoin’s recent dip attracts strong accumulation, Ethereum could stabilize. However, with extreme fear, ongoing de-leveraging, and weak bid-side liquidity, a drop to $1,900 seems increasingly probable.