Why is Ethereum Price Down 13% Today?

Ethereum's price fell below the bottom trendline of the expanding channel pattern on the daily chart. The sharp fall came amidst Tuesday’s sell-off in the crypto market, which triggered a total liquidation worth $1.99 billion across 450,642 traders, according to Coinglass data. This bearish movement has also been reflected in the consistent outflows of U.S. spot Ethereum ETFs over the past four days, compounding market concerns further.

The fear and greed index for Ethereum dropped to 28%, reinforcing a predominantly bearish sentiment among market participants. Ethereum, the second-largest cryptocurrency by market capitalization, experienced a significant price plunge of over 13% during Tuesday’s U.S. trading hours, bringing its price to $3,057, the lowest level since mid-July. More broadly, selling pressure persisted across the crypto market, with Bitcoin also breaking below its $100,000 resistance mark. The rooting causes behind this sharp downturn include:

• A strengthening U.S. dollar
• ETF outflows
• Cascading liquidation in the futures market

The big question remains: Will Ethereum lose its critical $3,000 support level?

Over the past week, Ethereum's price has seen a consistent decline from $4,250 to the current value of $3,057, reflecting a 28% loss. Similarly, Ethereum's market cap has dropped to $387.29 billion.

This downside trend started gaining momentum last week with heightened U.S.-China trade tensions and hawkish signals regarding a December rate cut from Federal Reserve Chairman Jerome Powell, which resulted in a shift towards a risk-off sentiment. These developments pushed the U.S. dollar index (DXY) to a three-month high of 99.87, making cryptocurrencies—largely traded against the dollar—more expensive for global investors.

Adding to the downtrend, U.S.-based spot Ethereum ETFs experienced cumulative outflows of approximately $135.7 million, as reported by Farside Investors on November 3rd. This showcases an increasing trend of profit-taking and institutional demand withdrawal amidst broader market uncertainty.

Ethereum's 11% drop today triggered significant market volatility, leading to a cascade of liquidations on major exchanges. According to data from Coinglass, over $572 million in long positions for Ethereum were liquidated, marking one of the largest single-day liquidations since the October 10th sell-off.

This sharp drop underscores the risks of leveraged positions in a market increasingly leaning towards a risk-averse sentiment. The events have highlighted the need for traders to exercise prudence, as speculative positions face higher vulnerability during such turbulent periods.

Over the past two weeks, Ethereum's price steadily corrected within a bearish expanding channel pattern, defined by two diverging, downward-sloping trendlines—a classic signal of market uncertainty.

Today's dip pushed Ethereum below the channel's bottom trendline, signaling aggressive selling pressure. If Ethereum's daily candlestick closes below this trendline, further selling could extend the price decline first toward $2,887, and potentially as low as $2,388. Additionally, Ethereum now trades below its 200-day exponential moving average (EMA), reinforcing the bearish sentiment in the market.

Despite this bearish scenario, there is a glimmer of hope. The Relative Strength Index (RSI) for Ethereum has dropped to 27%, positioning the asset in the oversold region. This scoring could be viewed by investors as a discount opportunity.

If buyers succeed in holding the bottom trendline, Ethereum may attempt a bullish rebound and regain upward momentum. However, this scenario depends strongly on buying pressure overcoming the current bearish environment.