Tron Founder Justin Sun Asks the Crypto Community What's Happening to Ethereum

Tron founder Justin Sun is asking the crypto community about what is happening to Ethereum, against the backdrop of liquidations that reached $2.1 billion

Justin Sun, the founder of cryptocurrency Tron, took to social media on Monday to ask the crypto community what is happening to Ethereum, as liquidations hit $2.1 billion in the last two weeks.

As the network struggles with high-leverage trading issues, Sun highlighted how any losses would be passed on to decentralized finance protocols operating on the blockchain.

However, a glance at the broader market trends shows that while crypto liquidations have been significant, they are not entirely unexpected given the strong rally in 2024.

What is happening to Ethereum?

As of Thursday's early Asian trading session, ETH was valued at $1,880, a 51.63% decline over the past three months, when it clocked $3,888 during the December bull run.

Bears have driven the crypto down 30.6% in the last 30 days and nearly 18% in the past week, according to CoinGecko.

After Sun asked about what is happening to ETH, one crypto trader replied that the network has struggled to sustain meaningful transaction growth since its 2017 peak.

Moreover, the trader, who is also the founder of artificial intelligence crypto finance system PostFiat, Alexander, added that it also failed to become deflationary when transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) model.

He also noted that the most actively used parts of the blockchain, such as Arbitrum (ARB) and Base, are either highly inflationary or centralized.

"So begs the question…. What is the point of the chain to which the answer is: the same thing as every other blockchain. To move tether about and to ‘store value’ Pretty depressing tbh.”

Earlier this month, CryptoQuant CEO Ki Young Ju shared a chart that showed the record selling pressure on Ethereum over the past three months.

On-chain data revealed that $1.8 billion worth of ETH exited exchanges last week, the largest outflows since December 2022.

According to the chart, the last time ETH had a 30-day positive moving average was on February 26, when Bitcoin’s price was stumbling towards $82,000. The coin’s 24-hour Coinbase premium index has also been trending in the red for the past seven days, spelling weakening buying pressures from US traders.

Ethereum’s trading volume has plummeted by 38.17% to $36.82 billion, and open interest (OI) in futures has also dropped by 2.61% to $18.05 billion, suggesting there are more traders exiting positions than opening new ones.

CryptoQuant data also shows that options volume has declined by 7.43% to $663.71 million, but options open interest is up 2.17% to $5.77 billion, showing there is a rising demand for longer-term derivatives positions as traders wait to see where ETH’s price will go.

Will Ethereum recover?

Ethereum’s price action as of now looks largely bearish; bulls are slowly ceding control to market bears, dragging the crypto’s price further down. In the past 24 hours, ETH futures liquidations reached $43.12 million, according to CoinGlass.

Of this total, $26.94 million were long liquidations, while $16.18 million came from shorts, indicating a market lacking clear direction.

Analysts have outlined two possible scenarios for Ethereum’s next move. A bearish breakdown could see ETH fall below the $1,440 threshold, potentially triggering further declines toward the $1,000 mark. On the other hand, a recovery above resistance levels near $1,960 could help the coin garner some positive momentum, with a possible push toward $2,200.

Technical indicators like the Relative Strength Index (RSI) at 32.1 and Stochastic Oscillator (Stoch) at 25.1 are nearing oversold territory, adding to the bearish momentum. A failure to hold above the $1,750 psychological support zone may increase selling pressure, while a daily close below $1,700 could invalidate any consolidation attempts, accelerating the downward trend.

One trader on social media has spotted a historical ETH 3-year Stochastic RSI trend, which dictates that oversold levels preceded the start of an upward price rally.

HISTORIC ETH SIGNAL TRIGGERED!

Ethereum’s 3-year Stochastic RSI hits oversold levels.

Every time this happened, a massive rally followed! pic.twitter.com/XZdtIw5OL7

— Ben (Crypto Ben) (@CryptoBen_) March 14, 2024

Still, the prediction was dismissed by