- Ethereum has fallen below key support levels, increasing the risk of further decline.
- Investor sentiment weakens as Ethereum futures open interest drops 10% in the last day.
- Whale moved 30K ETH to FalconX and GalaxyDigital, signaling potential sell pressure.
Ethereum faces market volatility since its price has fallen below key support levels. As of press time, ETH is trading at $2,093, showing an 11.64% decline over the past day. Analyst Stockmoney Lizards highlighted in an X post on Tuesday that Ethereum has dropped below the previous support line, thus increasing the likelihood of a decline. This is similar to the pattern observed for Bitcoin, where it formed a double-top in 2021, implying the possibility of a further decline.
Short-Lived Ethereum Rally
This recent decline has come in the wake of a short-lived uptrend caused by U.S. President Donald Trump’s announcement on March 2 of the formation of a U.S. Crypto Strategic Reserve. This news caused investors to have a positive outlook, and Ethereum’s price rose above $2,500.
However, Trump’s announcement on March 4, of new tariffs on China, Canada, and Mexico reversed the trend, triggering concerns over a broader economic slowdown, thus immediately sending Ethereum back down.
Some market signals reveal that investors are gradually losing their confidence. According to the analytical platform Coinglass, open interest in Ethereum futures has declined by 9% in the last 24 hours. The total value locked has also declined in the different decentralized finance projects based on the Ethereum platform. While previously the TVL was at $71 billion in January, it has reduced to $48.63 billion as of March 4 due to increased market uncertainty.
Related: Ethereum Nears Critical Support: Will a Breakout Happen?
Bearish Outlook for Ethereum
From a technical standpoint, Ethereum has a completely bearish outlook. The RSI has decreased to 34, just below the oversold territory, suggesting weak buying power. Also, the price of Ethereum has dropped below important moving averages. The EMA 10-day is $2,338, and the SMA 50-day is $2,852. Both of these indicators point towards a further deterioration of the downward trend.
Source: TradingView
The first level of support lies at the $2,069 mark, while resistance levels are at $2,163 and $2,321. If the bearish pressure persists, Ethereum will likely face additional setbacks soon, and investors will remain worried about the market trends.
The whale activity also points to a change in sentiment as the large investors put in new orders. Data from Lookonchain revealed that a whale with more than 110K ETH ($235M) in its balance is possibly dumping its Ethereum. Within the last 14 hours, the wallet made transactions for 30,000 ETH to FalconX and GalaxyDigital and received 7.76M USDC from FalconX, showing a shift of their funds.
