Why Is Ethereum (ETH) Price Down Today? Factors Behind Ether’s Recent Decline
Ethereum (ETH) has experienced a notable decline, with its price falling by 9% over the last three days, including a 3.5% drop in the past 24 hours, bringing it down to $2,492. This decline mirrors the broader crypto market, which saw a 0.8% drop in total capitalization, reaching $2.29 trillion on October 23, 2024.
Here’s a closer look at the key factors contributing to the recent Ether price drop:
1. Massive Long Liquidations
One of the primary reasons for Ether’s price dip is the wave of liquidations that hit the crypto market. According to data from CoinGlass, over $24 million worth of Ethereum leverage positions were liquidated, with $23.2 million of those being long positions. The broader market saw $122 million in total liquidations, intensifying downward pressure on ETH as traders closed leveraged positions, pushing the price lower.
2. Underperformance Against Bitcoin
Since the start of 2024, Ethereum has struggled to keep pace with Bitcoin (BTC). Following the U.S. Federal Reserve’s interest rate cut in September, Bitcoin has surged by 11%, while Ethereum has only managed a 6% gain in USD terms. This underperformance has continued, with the ETH/BTC ratio falling by 31.5% since June, reaching a 42-month low on October 23. This decline highlights a shift in investor preference toward Bitcoin, particularly as spot BTC ETFs attract more institutional demand compared to Ethereum ETFs.
3. Strong Resistance Levels
Ethereum’s price faced significant resistance at the $2,800 level, with congestion from sellers between $2,545 and $2,621, as indicated by data from IntoTheBlock’s IOMAP model. Approximately 2.0 million ETH were purchased by 3.2 million addresses in this zone, creating a stiff barrier to price recovery. Additionally, the 100-day simple moving average (SMA) around $2,675 further reinforces this resistance, making it difficult for Ether to break higher.
4. Short-Squeeze Risk Amid Rising Leverage
Market intelligence firm CryptoQuant has pointed out that Ethereum is at risk of a short squeeze due to increasing leverage in the futures market. The Estimated Leverage Ratio shows traders are taking on more risk, opening high-leverage short positions that bet on further price declines. This leaves ETH vulnerable to a short-squeeze event, where a rapid price increase could force shorts to cover their positions, potentially leading to sharp upward volatility.
In conclusion, Ethereum’s recent price drop is the result of several interrelated factors, including large-scale liquidations, weaker performance against Bitcoin, strong resistance zones, and rising leverage risks. With ETH struggling to regain momentum, investors should closely monitor key technical levels and market sentiment as they navigate the current volatility.