Why Is Ethereum Down? Key Reasons Behind The Downtrend

Why Is Ethereum Down Today? What’s Driving The Red Market?

Why Is Ethereum Down Today?

Ethereum is going down, same as the overall crypto market. It was expected that the crypto market would see a rally, preferably a Santa rally, however, investors and traders are left waiting for it. Ethereum, in fact, has suffered two consecutive hits despite the greedy market sentiment.

Crypto Not Recovering Soon

The market fell by 3.19% in one day’s time, after which the market’s overall cap reached $3.32 trillion. As per Ethereum price history, it suffered a second round of hit of around 4% to finally trade at $3,354.5. The market feels as if going into a bearish mode, however, at the same time, there are glimpses of strong investor confidence also, exemplified by drop in exchange reserves.

Why Ethereum Is Down Today

If we do a technical analysis of the (ETH) ethereum price graph of around the past 4 hours, we clearly see heavy rejection from the $3,524 zone. The price does improve with the moving average 50, but it does not make quite a difference for Ethereum. Expectations from MA 20 also end up in failure. Three days back, on Dec.23, there was a death cross over during this time frame, suggesting an Ethereum price dip we can now have a look at.

Are Traders Keeping A Distance From Ethereum Today?

Well, the 10.06% fall in its trading activity does suggest this. Despite a billion dollar surge across open interest, the long/short remains at 0.846. And when we search this deeper, we realize that over 50% of the total open future trades for ETH are shorts only, further reinstating the bearish nature of the price movement.

Exchange Reserves, ETFS Flow

Ethereum reserves, as mentioned, are also down. While this indicates movement of assets from exchanges to cold wallets, this also indicates rising confidence in the crypto as well as expectations of an upcoming price rise. At a given point, the exchanges held only 19.05 million ETH tokens.

Furthermore, the last open day of ETFS, Dec.24, saw only $53.6 million inflow and zero outflow. The highest inflow was registered by Blackrock’s ETH - $43.90, followed by ETHW by Bitwise - $6.19 million and by Fidelity’s FETH - $3.45M.

Final Thoughts

Mixed feelings can be observed as the market is seemingly going into a bearish mode while exchange reserves’ drop is signifying rising investor confidence. Market may be going down, but people still make profits with their knowledge. It is important to predict market movement smartly for a profitable play.