Ethereum price dropped by 20% in February as the weakness in the crypto market accelerated. It has now dropped in the last six consecutive months, erasing billions of dollars in value. This ETH price prediction explores what to expect in March and whether it will bounce back.
Why Ethereum Price Crashed in February
ETH price sank in February because of the broader crypto weakness as market participants waited for the US to strike Iran. Odds of a strike soared on Polymarket and Kalshi, two of the biggest prediction marketplaces.
A war in the Middle East is risky for the crypto market because of its impact on the oil market. Data shows that Brent crude oil soared by 7% to $78, while the West Texas Intermediate (WTI) rose by 7.3% to $73.
Natural gas prices have also rallied, pushing investors to lower their bets on the number of interest rates to expect from the Federal Reserve this year. Odds of three rate cuts have dropped, with many analysts anticipating one or two cuts.
Ethereum price also retreated as spot ETF outflows continued. Data compiled by SoSoValue shows that these funds had over $369 million in outflows in February, the fourth consecutive month of losses. These funds now hold about $10.9 billion in assets, much lower than nearly $20 billion at the peak.
There are signs that some crypto investors dumped their assets and moved to gold and silver, which are doing well as safe-haven assets.
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Ethereum futures open interest also continued falling, a sign that demand in the leveraged market dropped. It dropped to $24 billion from the year-to-date high of over $43 billion.
At the same time, Vitalik Buterin, its founder, continued selling thousands of ETH coins in February. Historically, many investors tend to sell assets whenever insiders start selling.
Will ETH Price Rebound in March?
There are some potential catalysts for ETH price in March. The most notable one is the potential ceasefire between Iran and the United States. Polymarket data places the odds of a ceasefire by April 30 at 67% and March 31st at 46%. Ultimately, this war will end, with the US and Israel running out of defensive weapons. Such a move will lead to higher Ethereum and crypto prices.
The other potential catalyst for Ethereum is dip-buyers. History shows that Ethereum tends to have V-shaped recoveries whenever it moves to a bear market. This situation may happen this month since the Crypto Fear and Greed Index remains in the extreme fear zone.
Technical Analysis Suggests More Pain for ETH Before Rebounding
The daily chart suggests that the ETH price may have some more pain in March before rebounding. It remains below all moving averages, while the Supertrend indicator has remain in the red since January 19 this year.
Most notably, the coin has formed a bearish pennant a common, continuation sign made up of a vertical line and a triangle. Therefore, the coin may drop further, potentially to $1,500 and then bounce back later this month.
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