Ethereum Drops 12%, Market Skepticism Grows, Bounce Expected
Ethereum Drops to $2.3K – Is a Recovery in Sight?
Ethereum [ETH] has significantly lost value in recent days. Between January 16 and 22, the price fell by almost 12%. The support mark of $2310 was tested but was able to hold up until the time of publication. Data from the derivative markets show that market participants are cautious and do not expect another short-term ETH rally.
The Current State of the Ethereum Market
In addition to price development, the analysis of the derivative markets also provides valuable information. Ethereum has been on a downward trend for the last ten days, parallel to Bitcoin. The fall below the support mark of $2400 was significant. A month ago, the bulls were still fighting hard to drive prices above this mark. Therefore, the decline reflects the dominance of the bears.
The Ethereum funding rates show that the strong bullish sentiment of late December and early January has been replaced by skepticism. On January 3, the funding rates plummeted from six-month highs to +0.0105%. The positive rates show that more participants were willing to go long than short, but they were not an indicator of a strong bullish sentiment.
How Far Could the Ethereum Price Fall?
An analysis of the order book data from MobChart shows ETH limit buy orders worth $2.71k at the $2300 mark. An additional $2.89k ETH in limit orders were present at the $2.2k level. Therefore, these could be the two levels where a reversal could begin.
In the north, the $2.6k and $2.5k levels had a large number of ETH sell limit orders. To better understand the short-term tendency of ETH, AMBCrypto reviewed the liquidation level data from Hyblock. Notably, the cumulative Liq Level Delta was strongly negative. This shows that the short liquidation levels far outweighed the long liquidation levels.
As a consequence, a rise in ETH prices would trigger more liquidations than a further decline. This suggests that the likelihood of a bounce is higher than further losses.
Recovery in Sight?
In the north, the $2440 and $2490 levels have estimated liquidations worth $80 million. Together with the buy wall at $2.3k and the sell wall just below $2.5k from the order book heatmap, a bounce to $2490 seems likely.
Sources: AMBCrypto, CryptoQuant, MobChart, Hyblock