Ethereum (ETH) Price Drops Over 4.5% to Around $2,380

The drop began after ETH plunged below a key support zone around $2,530, triggering over $200 million in long liquidations as traders' leveraged positions were force sold.

Ethereum (ETH) price slipped over 4.5 percent in the last 24 hours to trade around $2,380 on Thursday, succumbing to a combination of technical, macroeconomic, and market structure headwinds that unfolded throughout the course of the week.

This pushed the cryptocurrency down from PKR 704,396 on May 18 to trade at PKR 679,782 today, incurring a PKR 24,614 loss per coin.

Ethereum Price Drops As Key Support Breaks

The decline in ETH price began after it plunged below a key support zone around $2,530, which triggered over $200 million in long liquidations as traders’ leveraged positions were force sold.

The decrease in technical support, converging with a broader pullback in the crypto market and decreased institutional interest, cascaded further, shifting the Relative Strength Index (RSI) from overbought extremes of 86 to 38. This signaled a stronger bearish bias and profit-taking opportunities.

Highlighting the technical breakdown, the crypto slid below its 50-day simple moving average at $2,530. Several analysts had identified this level as critical due to the Fibonacci retracement and reaction from this zone in March.

Institutions Unwind Ethereum ETF Holdings

The Spot Ethereum ETF has also seen decreased interest, reporting over $94 million in outflows over the past two weeks. This indicates that the demand for ETH exposure from institutions is modest.

In derivatives markets, funding rates shifted to the negative, and open interest decreased to $16.7 billion, a 48 percent decrease from the January highs. This suggests that speculative participation is waning and bearish sentiment is rising.

Buy The Dip or Further Down?

Several analysts view the current pullback as an opportunity to purchase ETH before it continues its broader uptrend towards $3,000 and beyond, especially with levels around $2,400 presenting a strong entry point.

Technical patterns such as the weekly Stochastic RSI indicate that there is additional space before reaching overbought extremes again, while pseudonymous traders are preparing for the $2,330 to $2,274 range as critical support.

However, the lack of interest from institutions and decreasing speculative participation might put further downward pressure on ETH if there isn't a strong catalyst for a recovery.

Despite the recent setbacks, Ethereum’s ongoing scaling and network fortifying initiatives will be crucial for a sustained recovery in price and interest.

Moreover, broader crypto market sentiment following the recent setback from March highs and renewed institutional inflows will be closely watched to gauge the potential for a return to higher highs in the coming months.