Ethereum (ETH) Price Prediction: Coin Eyes Decline Below $3,000 as Traders Reduce Activity

Ethereum's (ETH) price peaked at $3,443 on Tuesday and has since witnessed a correction. It currently trades at $3,063 at press time

Ethereum’s (ETH) price has undergone a correction following its peak at $3,443 on Tuesday. At press time, the coin is trading at $3,063, showcasing a 3% loss in value over the past 24 hours.

With bullish sentiments waning, the coin risks dipping further toward the $2,900 price level. Here's a analysis explaining why this scenario may unfold in the short term.

Ethereum traders have reduced their activity as the coin's price has declined. In the past 24 hours, ETH's trading volume has amounted to $35 billion, indicating a 25% decrease.

A price drop signifies a weaker demand for the asset as the number of sellers outstrips buyers. In conjunction with ETH's price and volume both decreasing, this suggests a loss of momentum, which could mark the conclusion of the coin's bullish trend.

This trend is typically interpreted by traders as a lack of conviction among market participants, which further discourages activity and can result in a self-reinforcing cycle of declining price and volume.

Furthermore, Ethereum's open interest dropped to a seven-day low on Thursday, which confirms the decreasing market activity. According to data from Santiment, the coin's open interest, which measures the total number of outstanding contracts in the derivatives market, now stands at $8.26 billion. It has decreased by 12% since Monday.

When open interest decreases, existing contracts are being closed rather than new ones being opened. During periods of price rallies, a decrease in open interest suggests that traders are locking in profits or limiting losses by closing their positions.

As with ETH, this occurs near the peak of a price trend, where traders may want to secure their gains before a potential reversal.