Why Is Ethereum Down Today? Will It Rise Above $4,000?
The cryptocurrency market does not appear to be recovering anytime soon, with investors still waiting for a Santa Claus rally. The overall cryptocurrency market capitalization has fallen by 3.19% since yesterday and currently stands at $3.32 trillion. Ethereum has also taken another hit of around 4% and is currently trading at $3,354.5. While market sentiment is in a greedy mood, market indicators suggest otherwise. Today we will explore why Ethereum fell.
Analyze ETH Chart
When we examine the four-hour chart of Ethereum, it is clear that the price has been severely rejected by the $3,524 area, and the 50 moving average is not acting as a friend either. MA 20 also failed to provide any support. On December 23rd, we witnessed a death cross on this time frame, which suggested that we are now looking at lower prices.
A 10.06% drop in trading activity suggests traders are distancing themselves from Ethereum today. Despite a surge in open interest of around $1 billion, the long-short ratio remains at 0.846. Breaking it down, we can see that 54.17% of the total ETH futures open interest volume is short, indicating that traders are indeed bearish on the price action.
Foreign exchange reserves and ETFS flows
According to data from CryptoQuant, Ethereum exchange reserves are declining. This means investors are moving assets from exchanges to cold wallets. This signals growing confidence in cryptocurrencies and an impending price increase. As of this writing, the exchange holds only 19.05 million ETH tokens.
remote data It was revealed that on the last open day of ETFS, December 24, they only saw an inflow of $53.6 million and no outflow. Blackrock’s ETHA received the highest inflows at $43.90, followed by Bitwise’s ETHW ($6.19 million) and Fidelity’s FETH ($3.45 million).
what happens?
Although the market feels like it is entering bear market mode, the decline in foreign exchange reserves clearly highlights investor confidence. this Prices may drop However, momentum is slowly building. People will always wonder why Ethereum dropped today and market makers will make money because of their lack of knowledge. as we do in our Bitcoin Analysis Earlier, the market surprised traders and when people turned bearish, the cryptocurrency would start moving in the other direction. Only smart investors can predict market trends and operate accordingly.
