The cryptocurrency market experienced a dramatic downturn as Ethereum collapsed below $3,300 before increasing by 7.6% in the last 24 hours to around $3,436.98 at press time.
ETH Price, Source: CoinMarketCap
Ethereum's decline represents a stark reversal from its position just 36 hours earlier, when the asset traded above $3,900. Market observers had been discussing the possibility of a breakthrough past $4,000. Instead, the cryptocurrency plummeted to $3,250, erasing all year-to-date gains and incurring a loss on an annual basis.
Mass Liquidations Hit Over-Leveraged Traders
The sudden fluctuations in prices led to massive liquidations on various cryptocurrency exchanges. Ethereum alone saw over $375 million in long positions wiped out within 24 hours. Combined liquidations of all cryptocurrencies totaled $1.3 billion, with long positions accounting for the majority of $1.1 billion.
According to CoinGlass data, over 340,000 traders faced liquidation during the market turmoil. The largest single liquidation occurred on the HTX exchange, with a position of $48 million. These figures highlight the significant leverage many traders had employed before the market turned.
Analyst Warns of Further Downside Risk
Ali Martinez, a cryptocurrency analyst, has predicted a bearish outlook for Ethereum in the future. In his analysis, an inability to recover the $4,000 loss will lead to further losses. The forecasts have possible declines to $2,400 or even $1,700 in a worst-case scenario.
Source: X
The resistance level of 4,000 appears distant given current market conditions. Ethereum would need to rise around 20% from its current levels to test that threshold. Market sentiment has shifted considerably from the optimism present earlier in the week.
Bitcoin's situation adds complexity to the broader market outlook. The leading cryptocurrency briefly dipped below $100,000, prompting some analysts to declare the start of a bear market. The asset has since recovered slightly, trading at around $103,663.22 at press time, suggesting a 4.53% increase in the last 24 hours.
BTC Price, Source: CoinMarketCap
