Ethereum Struggles Below $3,000 as ETH ETFs Experience Three-Day Outflows

Ethereum's price has fallen below the crucial $3,000 mark due to significant outflows from Ethereum ETFs. Over a three-day period, these investment products have seen a decline in funds, increasing market wariness. The leading altcoin's price is under pressure as traders react to recent market developments.

Key Takeaways

Ethereum's price dropped below $3,000, reaching a low of $2,895.
The decline is associated with three consecutive days of net outflows from Ethereum ETFs, totaling $286.5 million.
A liquidation cascade occurred, resulting in nearly $207 million in long positions being closed amid market uncertainty.
Ethereum has formed a bearish flag pattern, indicating potential further declines in the coming months.
The presence of a death cross in moving averages raises concerns about ongoing price weakness.

Ethereum price slips below $3K as ETH ETFs see three-day outflows.

Market Overview

Ethereum's price recently slipped below the critical psychological support level of $3,000 as U.S. Ethereum ETFs faced their third consecutive day of net outflows. This downturn has been accompanied by a broader risk-averse sentiment in the market.

Data from SoSoValue reveals that nine spot Ethereum ETFs experienced $224.7 million in net outflows on Monday, December 15. This marks the largest single-day outflow since November 21. Leading the outflows was BlackRock’s IBIT, which saw $139 million exit, while Grayscale’s ETHE and ETH funds recorded net outflows of $35 million and $20 million, respectively. Notably, none of the Ethereum ETFs attracted inflows on this day.

Ethereum

These outflows represent a total decline of approximately $286.5 million over three days, with the ETFs experiencing a negative trend throughout December that follows a loss of $1.42 billion the previous month.

Ethereum's price fell sharply, dipping to $2,895 before stabilizing slightly above this mark at $2,929, reflecting a more than 6.3% drop in just 24 hours. Analysts had identified the $3,000 level as a crucial support area, suggesting that if it failed to hold, additional declines could ensue.

This sudden price drop caught many large, highly leveraged traders (also known as whales) off guard, triggering a liquidation cascade. Liquidations occur when traders are forced to close their long positions due to insufficient margin, exacerbating downward price movement.

According to information from CoinGlass, nearly $207 million in long positions were liquidated from the Ethereum futures market, contributing to a total of $658.8 million across the broader cryptocurrency market. Many investors appear to be retracting their positions in anticipation of upcoming U.S. employment data, which could influence the Federal Reserve's monetary policy, particularly regarding interest rate cuts.

Historically, cryptocurrencies, including Ethereum, tend to respond positively to expectations of interest rate cuts and decline when the outlook for such cuts appears uncertain.

Technical Analysis

On the daily chart, Ethereum has formed a substantial bearish flag pattern, which arises following a sharp price decline on high volume, establishing what is known as the “pole.” This is followed by a period of consolidation or slight price increase on lower volume, creating the “flag.” Typically, this pattern foreshadows further price declines in the months ahead, with the price often breaking below the lower boundary of the flag and resuming a downward trend.

Ethereum price formed a bearish continuation pattern on the daily chart.

A "death cross" has also been confirmed in late November, occurring when the 50-day simple moving average crosses below the 200-day simple moving average. Together, these bearish indicators substantially increase the likelihood that Ethereum's price could continue to decline until a market reversal occurs.

Currently, there is potential for ETH to dip below the flag's lower boundary towards $2,620, which corresponds to November's low. Traders previously defended this level, initiating a short-term recovery.

On the other hand, traders should watch for resistance at the $3,170 mark, which coincides with the 23.6% Fibonacci retracement level. A breakthrough above this level could signal the end of the current downtrend and shift market momentum back toward bullish conditions.