- Ethereum recently faced a sharp decline, losing over $380 million in liquidations due to macroeconomic factors and significant sell-offs by Jump Crypto.
- However, signs of recovery are emerging as investors begin to buy the dip, indicating potential stabilization and reclaiming of key support levels.
Ethereum has recently faced a significant downturn, with liquidations amounting to over $380 million within the last 24 hours. The sell-off was triggered by Jump Crypto’s massive sale, causing Ethereum to suffer the largest losses among the top cryptocurrencies by market capitalization. However, the market shows signs of recovery as bullish investors start to buy the dip.
Ethereum’s Plunge: A Series of Unfortunate Events
The cryptocurrency market, including Ethereum, experienced a dramatic decline, driven by several macroeconomic events. The Bank of Japan’s sharp interest rate hike led to a crash in the Japanese stock market. Additionally, lower-than-expected US Nonfarm Payrolls data stoked inflation fears. Moreover, repayments from Genesis Trading and Mt. Gox added selling pressure, and Kamala Harris’ rising election odds on Polymarkets created further market turbulence.
Ethereum was hit particularly hard due to Jump Crypto’s substantial move of 120,695 wstETH, valued at approximately $410 million, to exchanges like Binance and OKX. Rumors of Jump Trading’s exit from the crypto market, coupled with the Commodity & Futures Trading Commission (CFTC) investigation, exacerbated the situation. The result was a cascade of sell orders, leading to Ethereum’s 11% drop on Monday.
Market Movers and Liquidations
The sell-off significantly impacted DeFi protocols, resulting in over $350 million in liquidations. Cryptocurrency data aggregators noted a series of sell orders following Jump Crypto’s move. This heavy selling pressure caused ETH to lose key support levels, pushing it close to the lower boundary of a critical support zone around $2,340.
The liquidation wave also affected major players in the market. Wallets linked to Tron founder Justin Sun reportedly faced losses of about $280 million. Despite this, there was notable buying activity from wallets with similar behavioral patterns, purchasing 16,236 ETH with 37 million USDT, indicating a strategic buy-the-dip move.
Signs of Recovery and Future Outlook
Despite the sharp decline, Ethereum is showing signs of recovery. CryptoQuant data indicates a net exchange outflow of over 100,000 ETH, reflecting increased buying activity among investors. ETH’s Relative Strength Index (RSI) dropped sharply to 31.34, approaching an oversold region, which historically precedes a short-term rally.
Ethereum is currently trading around $2,500, having experienced a slight recovery from its earlier 25% drop. The major support level around $2,340, where 1.23 million addresses purchased about 50 million ETH, could provide a strong foundation for further recovery. If the market sentiment improves, Ethereum could reclaim the $2,803 support level. Conversely, a drop below the psychological $2,000 mark could invalidate the recovery thesis.
Ethereum’s recent plunge has been severe, driven by multiple macroeconomic factors and significant market movements by Jump Crypto. However, with increasing buy-the-dip activities and signs of recovery, Ethereum could bounce back. The next few days will be crucial in determining whether Ethereum can stabilize and reclaim its lost support levels or face further downward pressure.
