Ether’s price has experienced a significant drop, falling by 8% as it started the week on a bearish note. The cryptocurrency lost its weekly support level at $3,200, leading to substantial selling pressure and marking its lowest value since November 21, 2024. The decline in Ether’s value has sparked another major liquidation event for the altcoin, following recent trends. Within two weeks, over $90 million in leveraged positions were wiped out, with $77 million of those being long positions.
Despite this downturn, Ethereum’s open interest had reached a new all-time high on January 7, reaching $32 billion, indicating a predominantly bearish futures market. This was due to a surge in short positions in the past seven days. By January 12, open interest had declined to $28 billion, as traders began to adjust their long positions or take profits from short positions from its recent high of $3,700.
Compounding the bearish outlook, a noted decline in the demand for holding Ethereum has been observed over the past year. Analyst Benjamin Cowen highlighted that Ethereum’s circulation has increased by 45,000 ETH/month, bringing the current supply close to its pre-merge levels. While the transition from proof-of-work to proof-of-stake was supposed to create a deflationary dynamic through ETH burns, the supply has instead outpaced burn rates since early 2024.
Technically, Ether’s dip below $3,000 suggests a potential new range low, with a cleared liquidity zone between $3,000 and $3,100 igniting a buy-side liquidity sweep. Should Ether see a positive deviation from the $3,000 level on the daily chart, it may imply buyers regaining control. However, continued weakness could push prices down to $2,800, encompassing the weekly Fair Value Gap active since Donald Trump’s election. As always, investors should conduct their own research, as all trading involves risk.