Ethereum Faces Pressure After Failed $3.4K Support

Ethereum Faces Pressure After Failed $3.4K Support – What's Next?

Ethereum has entered a brief downtrend following its inability to maintain levels above $3,400 about six days ago. Since then, the cryptocurrency has traded within a minor descending channel and experienced a dip to around $2,800. Currently, Ethereum (ETH) is priced at $2,926, marking a 6.9% decline over the past day and extending a week-long trend of bearish movements.

Key Takeaways

Ethereum has dropped below the crucial $3,400 mark, entering a downtrend.
A significant Ethereum whale reported unrealized losses exceeding $54 million as prices fell.
Liquidations in futures markets surged, with a notable increase in forced exits of long positions.
Weak momentum is evident in the market, signaling further selling pressure.

Ethereum [ETH]

This downturn has led to a significant increase in both unrealized and realized losses in derivatives markets.

Whale Losses Increase on Hyperliquid

One significant Ethereum whale has seen its unrealized losses exceed $54 million due to prices dipping below $3,000. After Ethereum attempted a rebound post-April crash, a Bitcoin whale switched its capital into Ethereum, known as “BitcoinOG” on Arkham. This entity transitioned from Bitcoin and established substantial long positions in Ethereum, accumulating nearly $700 million in leveraged long exposure, making it Hyperliquid's largest holder of Ethereum long positions.

ETH whale longs

As Ethereum prices fell back to below $3,000, this whale's Ethereum long positions lost over $54.81 million in value. The unrealized profit plummeted from approximately $119.6 million to roughly $54 million. However, the risk of liquidation appears distant, with the estimated liquidation price around $2,082, indicating confidence as no positions were closed despite these growing losses.

Increase in Liquidations Across Futures Markets

In addition to rising unrealized losses, the number of exits and forced liquidations in the futures market increased dramatically. Data from CoinGlass shows that derivatives volume spiked by 53.5% to reach $87.15 billion, while open interest fell by 55.29% to $37.67 billion.

Ethereum derivatives

Typically, a decrease in open interest alongside increased volume indicates a flurry of trades as traders balance their books. Consequently, liquidations of Ethereum surged, totaling $196 million on December 15 and an additional $58 million the following day, with long liquidations dominating this activity, amounting to $213 million.

Ethereum liquidations

Individual wipeouts were also reported during this market downturn. Onchain Lens highlighted that trader Machi Big Brother faced another forced liquidation on a 25x SETH long position, marking his tenth liquidation in recent weeks. Since the market crash on October 10, his account has recorded over 200 liquidations, leading to losses surpassing $22.9 million, with the current account balance at $53,178.

Weakening Momentum Amidst Selling Pressure

The price movement reflects the increasing stress within derivatives markets, as cascading liquidations have intensified the downward momentum. This has pushed the Stochastic RSI deep into oversold territory, currently around 17.

ETH Stoch & SAR

These readings typically indicate strong selling pressure and weak short-term momentum. If liquidation pressure continues, ETH might revisit the $2,700 range, where previous support was observed from Parabolic SAR. Conversely, any meaningful recovery would likely need bulls to reclaim the $3,000 level decisively, beyond which resistance could be encountered around $3,436, where previous Parabolic SAR resistance was noted.

Final Thoughts

As Ethereum navigates through these turbulent times, the spotlight remains on its ability to recover and stabilize. Investors should stay alert to emerging market signals and indicators that could dictate future price movements within this promising but volatile cryptocurrency landscape.