Ethereum Plummets, Faces Risks of Falling Below $3,000

Ethereum (ETH) faces renewed selling pressure after a brief recovery, falling below $3,400 amidst concerns raised by analysts. The lack of robust support at this level raises the potential for further downward movement towards $2,850 or lower. Options trading activity indicates increased selling calls and acquiring puts, contributing to downward pressure on the spot ETH price.

Ethereum Faces Downward Pressure, Risks Falling Below $3,000

The Ethereum (ETH) market has encountered a significant sell-off, with prices plummeting below $3,400 once more. This downturn follows a brief recovery last week that saw ETH climb above $3,600.

Critical Support Broken

According to crypto analyst Ali Martinez, Ethereum's descent below the crucial support level of $3,460 raises concerns. This development challenges bullish sentiment and increases the likelihood of further price declines.

Options Trading Weighs on Spot Price

Recent market activity reveals heightened selling pressure on ETH options. QCP Capital reports increased interest in selling calls and acquiring puts, which has contributed to downward pressure on the spot ETH price and elevated implied volatilities. Notably, the demand for puts has outpaced calls, resulting in a significant downside risk reversal skew of -5% in April.

Technical Resistance

On the upside, Ethereum faces immediate resistance at around $3,400, corresponding to the 23.6% Fibonacci retracement level of the recent downward movement. Additional resistance lies at $3,420, aligning with the trend line and a subsequent hurdle at $3,450. Clearing these levels could lead to a test of the 50% Fibonacci retracement level.

Further resistance is anticipated near $3,520, where the 100-hourly Simple Moving Average (SMA) converges. Breaking above this level could signal bullish momentum, with potential targets at the $3,650 barrier.

On-Chain Strength

Despite the price decline, Ethereum's on-chain indicators suggest underlying strength. The number of non-zero Ethereum addresses has surged to a new all-time high in recent weeks. This indicates a growing user base and sustained interest in the Ethereum ecosystem.

Downside Potential

With the critical support level breached, Ethereum faces the possibility of a continued correction towards $2,850 or even lower. The absence of robust support at the current levels increases the likelihood of further price declines.

Conclusion

Ethereum's recent price action has raised concerns among analysts. Technical resistance and options market activity suggest that further downward pressure is possible. However, on-chain indicators hint at underlying strength within the Ethereum ecosystem. The market's trajectory in the coming days will determine whether Ethereum can regain its upward momentum or succumb to further selling pressure.