Ethereum price remained in a strong downward trend this week and briefly crossed the important support level at $3,000 for the first time since July. It has dropped by ~40% from its year-high, indicating a steep bear market. This article explores some of the reasons it is falling and why it may rebound soon.
Ethereum Price Crash Falling Because of the Last Liquidation Event
ETH price has been in a steep downward trend over the past few months, falling from a high of $4,960 to the current $3,000. This crash occurred at a relatively good time for the market, with the Federal Reserve and other central banks cutting interest rates and stocks hovering at all-time highs.
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The Ethereum price has crashed as the impact of the October 11 liquidation event persists. Over 1.6 million traders were wiped out that day, with the Ethereum positions worth over $3.8 billion being closed.
As a result, the coin’s futures market open interest has continued to decline, from a high of ~$70 billion in August to $37 billion today.
ETH price has also dropped as American investors have remained on the sidelines, with many of them starting to sell their tokens. ETH ETF outflows jumped to $728 million last week, up from $507 million a week earlier. These funds now hold about $19 billion in assets, down from the year-to-date high of over $30 billion.
Additionally, the ongoing Ethereum crash could be a shakeout, a situation in which a soaring asset retreats to shed weak market participants. Shakeouts are common in the crypto market, which explains why tokens regularly crash after a big rally.
Why ETH Price Will Rebound Soon
First, the ETH price may rebound now that it has moved into oversold territory. The Relative Strength Index (RSI) has moved to 30, while the MACD indicator has moved to the oversold level at 10. As such, the token is likely to rebound as investors buy the dip.
On top of this, the coin has also formed a falling wedge pattern, which will likely lead to a rebound as the two lines near their convergence.
Second, some key companies are still accumulating the coin. A good example of this is Tom Lee’s BitMine, which continued buying last week and now holds over 2% of the supply. SharpLink, another treasury company, has also continued falling this month.
Third, the Ethereum price will likely benefit from the upcoming Fusaka upgrade, which will introduce new scalability, efficiency, and decentralization updates. It is common for a cryptocurrency to rebound ahead and after a major upgrade.
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