Ethereum Price Analysis: Why ETH Fell 60% and What Could Happen Next

Ethereum Price Analysis:

Ethereum price plunged to $2,127 on Aug 5, down by a staggering 61% within the 7-day timeframe, markets data suggests that a sell-off from Ethereum ETFs and major crypto trading firm had accelerate the ETH downswing.

Ethereum Price Sees New 2024 Low as JumpTrading Sell $277M ETH

On Monday Aug 5, 2024 the cryptocurrency markets experience a historic downturn, attributed to several bearish catalysts.

The downtrend first began around August 2, when  the US Bureau of Labor Statistics first published data on US Non-Farm Payroll (NFP) for July 2024. Based on that report, US recorded a 114,000 surge in unemployment claims rose for July. This hawkish labor market report came further exacerbated investors’ bearish sentiment after the US Fed announced a rate pause during the FOMC meeting held on July 31.

But curiously, market data shows that Ethereum price experienced losses significantly larger than its rival assets like Bitcoin and XRP. More so, when compared to the broader crypto market average ETH also performed abysmally below the industry average.

Looking at the chart above we see that ETH price declined by 60.58% when it slid toward $2127, on Monday Aug 5. Meanwhile, in comparison, the global crypto market capitalization (TOTALCAP) only declined by 30.90%, as it shed $756 billion during the heat of the cascading liquidations.

When a major asset like Ethereum underperforms relative to the broader market trends, it signals the presence of a dominant internal bearish catalyst. Based on recent media reports, Ethereum’s dramatic 60% decline has been linked to massive sell-offs from whale investors.

While Ethereum ETFs recorded negative net-flows last week, another major crypto trading firm, JumpCrypto, has also been spotted making a strategic ETH sell-off, further amplifying the bearish market liquidations.

Since July 25, Jump Trading has made the following on-chain transactions:

• Redeemed 83,091 wstETH ($341 million) into 97,600 stETH
• Unstaked 86,059 stETH ($274 million) from Lido Finance
• Deposited a net amount of 72,213 ETH ($231 million) to various CEXs, including Binance, OKX, Bybit, Coinbase, and Gateio

This explains Ethereum price has experience much larger losses (60.58%) compared to rival assets like Bitcoin (30%) and XRP (26%) between Monday July 29 and Aug 5.

Although Ethereum price has reclaimed the $2,500 level at the time of writing on Aug 8, traders are still cautious.

Currently, Jump Trading still holds around 37.6K wstETH ($128 million), 21K ETH ($61.5 million) in the wallet, and 11.5K stETH ($33.5 million) in staking deposits. If the company opts to continue the sell-off, it could trigger another wave bearish sentiment, driving Ethereum’s price down significantly.

Ethereum price forecast: ETH Bulls Face Uphill Task Reclaiming $3,000

Ethereum (ETH) has shown a moderate recovery to $2,588.46, reflecting a 22.35% rebound over the past three days. Despite this short-term gain, the overall technical outlook remains bearish, with the cryptocurrency facing significant resistance and a potential retest of lower support levels in the coming days.

The daily chart reveals that ETH has encountered resistance at the 20-day Simple Moving Average (SMA), currently situated at $3,085.03. This level represents a key barrier for ETH, and failure to break above it could reinforce the prevailing bearish trend.

The recent recovery appears to be a relief rally within a broader downtrend, as indicated by the 60.58% decline from late July to early August. The sharp drop suggests that the bears remain in control, and unless ETH can clear the $3,000 resistance zone, further downside risks persist.

The Balance of Power (BOP) indicator, which currently reads 0.86, signals that sellers still have the upper hand, although there has been some bullish pressure recently. This mixed sentiment suggests that while ETH may experience short-term rallies, the overall trend remains bearish.

If the bearish momentum resumes, the next key support levels to watch are $2,336.31 and $2,300. A break below these levels could accelerate the decline, potentially leading ETH towards the psychological $2,000 mark.

In summary, while Ethereum has managed a short-term bounce, the technical indicators point to a continued bearish outlook.

The $3,085.03 resistance level is crucial for bulls to overcome, but with strong selling pressure still evident, ETH is more likely to retest the $2,300 support in the near term.