Ether’s price has seen a precipitous fall, plummeting 40% from its high last week amidst the crypto market’s largest single-day liquidation event since 2022. The decline took ETH down to $2,080, its lowest level since January 2024, following weekend volatility that extended into February 3rd. Ethereum, along with other cryptocurrencies, experienced significant losses after the U.S. administration, under newly elected President Trump, initiated a potential “trade war” by imposing tariffs on imports from Canada, Mexico, and China. Canada responded in kind, triggering a ripple effect throughout financial markets.
The crypto market witnessed mass liquidations, totaling $2.32 billion in crypto positions over the past day, with Ethereum accounting for $626 million of these liquidations. Ether’s open interest also fell dramatically, losing 28% in just three days, indicating that futures traders were rapidly exiting their positions. In total, 751,287 traders were liquidated, with one of the most substantial being a $25.6 million ETH/BTC trade on Binance. This event has drawn comparisons to past market disturbances such as the Terra-Luna and FTX crises.
Despite these setbacks, Ethereum has partially rebounded by 30% from its lowest point, currently trading around $2,700. However, this recovery remains tentative. Ethereum’s price recently dipped below the 200-day moving average, indicating potential challenges in regaining upward momentum. The aftermath of the liquidation event will likely keep investors cautious until geopolitical tensions ease and market conditions stabilize.
From a sentiment perspective, there’s noticeable hesitance among Ethereum traders, with some expressing concern over the community’s subdued reaction compared to the responses seen from other crypto communities like Solana and Bitcoin. A sideways consolidation below $3,000 might be Ethereum’s short-term trajectory as the market digests the recent upheaval.
Overall, the market remains in flux, and investors are advised to proceed with caution as the full implications of the recent events continue to unfold.
