Ethereum has experienced a significant downturn, with its price declining nearly 29% over the past week, now trading below the $2,000 threshold. This drop marks a return to levels not seen in nine months, indicating a troubling trend across the broader cryptocurrency market.
The lack of buyer support has intensified the situation, and on-chain data reveals increasing stress among Ethereum holders. Many investors are resorting to panic selling as market conditions worsen.
According to on-chain metrics from the Realized Profit/Loss indicator, investors are divesting even while incurring losses. In just 24 hours, realized losses exceeded $1.2 billion, showcasing a wave of capitulation as holders prioritize risk mitigation over potential recovery. Such high levels of realized losses typically prolong downward trends by adding to negative momentum.
As holders continue to sell at a loss, Ethereum faces further downward pressure, reflecting a fragile market sentiment. Until selling activity significantly declines across the network, the asset”s ability to stabilize remains in jeopardy.
The behavior of long-term holders also mirrors this stress. The HODLer Net Position Change has shown a decline, with indicators flipping to red, which suggests net outflows from wallets typically associated with long-term holding. This is a concerning sign, as these holders are often viewed as foundational to Ethereum”s market stability.
The decision of long-term holders to sell amidst rising losses signals heightened anxiety, even among those previously confident in the asset. This shift adds macro-level pressure, increasing the likelihood that Ethereum”s decline could worsen prior to any potential recovery.
As of now, Ethereum”s price hovers around $1,920 following the substantial drop. The breach below $2,000 has reinforced a bearish sentiment across various timeframes. Current on-chain and sentiment indicators suggest Ethereum remains at risk of further declines in the short term.
Currently, Ethereum is holding above the $1,796 support level. Should this level fail to hold, the price could potentially drop to $1,671 or lower. Given that Ethereum is already at a nine-month low, the risk of further liquidation-driven selling increases if critical support levels break.
However, a recovery scenario is not out of the question, provided selling pressure subsides. If investors halt further selling, Ethereum could reclaim the $2,000 mark, supported by oversold conditions. The Money Flow Index indicates that selling pressure is nearing saturation, which historically precedes short-term relief rallies.
Should holding supply remain off exchanges, ETH could regain upward momentum. Under such circumstances, Ethereum may push above $2,000 and potentially target $2,500. Achieving this would negate the current bearish outlook and help restore market confidence.
