Essential Insights
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Sharp Decline Post-Rejection: Ethereum (ETH) fell nearly 12% to around $2,960 after failing to maintain the crucial $3,400 resistance, spurring increased selling activity across markets.
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Resistance and Support Dynamics: The rejection at $3,400 breached ascending support, refocusing attention on a potential drop to the $2,600 zone, with heavy buying interest identified in the $2,800–$2,850 range.
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ETF Outflows and Exchange Reserves: US spot ETH ETFs experienced $229.95 million in outflows, coinciding with a decline in ETH reserves on centralized exchanges, the lowest since 2016, while staking reached record levels.
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Long-term Outlook: Despite the current downturn, traders signal interest in a possible inverse head-and-shoulders pattern, hinting at a breakout target near $4,400, amid speculation about a potential ETH price range of $10K–$15K in the long run.
ETH Crashes 12% Weekly: Is a Drop to $2,600 Next?
Ethereum (ETH) has experienced a significant decline, dropping nearly 12% over the past week. Currently, it trades around $2,960. This downturn follows a failure to maintain momentum above the crucial resistance level of $3,400. Consequently, many traders have increased their selling activity across various markets.
After hitting the $3,400 mark, ETH encountered strong resistance. Analyst Kamran Asghar noted that this rejection occurred in a so-called OTE selling area. Following this, ETH broke through its ascending support line, raising concerns that it could drop to about $2,600 next.
In recent trading, ETH lost almost 5% in just one day. Trading volume surged over $31 billion, while derivatives volume rose 40% to $71.75 billion. Despite this increase in activity, many traders chose to close their positions, leading to a 5% decline in open interest.
Interestingly, data from order books shows considerable buying interest below the current price. Analyst Kriptoholder mentioned strong demand in the $2,800 to $2,850 range, with the most significant buy walls observed at $2,500 to $2,600. If ETH drops further, these levels may provide a support cushion for buyers.
The market faces additional challenges as US spot ETH ETFs recorded net outflows of $229.95 million on January 20, halting a streak of inflows. This shift indicates potential profit-taking or a dip in short-term confidence among investors.
Moreover, Ethereum’s supply on centralized exchanges has diminished, reaching its lowest levels since 2016. Analyst Arab Chain reports that reserves have fallen to 16.2 million ETH. The drop on exchanges like Binance reflects a broader trend, as fewer coins circulate.
Despite the current volatility, many traders remain optimistic about Ethereum’s long-term trajectory. Reports suggest that ETH might be forming an inverse head-and-shoulders pattern, hinting at a future breakout target near $4,400. Potential discussions around a future ETH valuation of $10,000 to $15,000 also circulate among market analysts.
This unpredictable landscape highlights Ethereum’s unique potential as a digital currency. As the technology behind blockchain continues to evolve, ETH’s value proposition remains notable. How these developments unfold will significantly impact Ethereum’s role in the broader tech ecosystem.
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