Ethereum has recently suffered a sharp decline, plunging nearly 20% within the last 24 hours and currently trading around $2,500. This downturn marks one of the most severe sell-offs for the cryptocurrency, as the price has dropped below the once-critical support level of $3,000, bringing notable concern among traders and investors.
This dramatic price slump follows U.S. President Donald Trump’s announcement to implement new tariffs on imports from Canada, Mexico, and China. Many cryptocurrencies, particularly Ethereum (ETH) and Bitcoin (BTC), witnessed simultaneous rapid declines after the tariffs were introduced, indicating the crypto market's sensitive correlation to traditional financial market dynamics.
According to reports, these new economic policies came as a shock, shifting market sentiment rapidly. Data from Coinglass indicates panic sale activity among large holders of Ethereum, colloquially known as 'whales,' contributed to the cascading wave of sell-offs. This has been characterized by significant liquidation events, leading to substantial market recalibration.
Crypto trader MaxBecauseBTC shared with followers on X, “This was the biggest Ethereum liquidation event in over two years with the most negative funding.” He also compared the current situation to the chaotic market conditions observed during the March 2020 COVID crash, hinting at the volatility inherent to cryptocurrency investments.
Alongside MaxBecauseBTC, Felix Hartmann, founder of Hartmann Capital, remarked on the backseat-driven market movement, citing the recent downturn as primarily fueled by forced selling. He mentioned, “The prices may be dislocated,” emphasizing the uncertainty surrounding the valuation of ETH and potential corrections as traders seek to stabilize their portfolios.
Adding to the discussion, Mechanism Capital partner Andrew Kang suggested optimism might not be out of grasp. He noted, “ETH may be oversold and could recover to $2,700,” hinting at potential bullish reversals if specific resistance levels can be surpassed. This perspective aligns with the belief many traders hold onto during significant retracements.
The market has reacted not only to Trump’s tariff announcements but also to the broader economic vagaries those policies imply. The quick sell-off is reminiscent of previous downturns tied to geopolitical announcements, illustrating cryptocurrency's dual nature as both speculative assets and perceived hedges against traditional financial structures.
Since the initiation of tariffs, other cryptocurrencies such as Bitcoin and XRP have experienced declines, with Bitcoin testing support levels around $93,878 after its own sharp drop of 4.66%. Meanwhile, Ethereum’s market cap slumped to approximately $354.13 billion, reflecting its challenge amid the current economic climate.
Over the past weeks, Ethereum has traded between $2,932 and $3,434, with recent trading volume reaching over $32.48 billion, attributing to 13.64% of the total market volume. With Ethereum off its all-time high of $4,864, set on November 10, 2021, and now down about 39.69%, the bearish sentiment continues as traders remain cautious.
Ethereum is currently at risk of encountering additional corrections as it tests pivotal support levels. Experts agree, if it cannot maintain above the $2,150 mark, the price could plunge lower, with estimates dropping toward $2,000 or even $1,750. The pronounced volatility underscored by recent market behaviors reveals traders must stay vigilant, particularly as the broader market reacts to financial policies and global economic shifts.
With the Federal Reserve also indicating potential monetary policy adjustments to curb inflation caused by higher tariffs, cryptocurrency markets like Ethereum face increased pressure. Higher interest rates typically deter investments away from riskier options like digital currencies, favoring safer pursuits such as bonds, which could exacerbate the selling pressure on cryptocurrencies.
Looking forward, traders will be closely observing Ethereum’s ability to bounce back from current lows. The key Fibonacci retracement levels around $2,609 are seen as indicators for any potential bullish reversal. If Ethereum manages to reclaim this area, optimistic sentiments may return to the market, but failure to maintain it may lead to more drastic moves lower.
For now, the market remains under scrutiny as traders await clearer signals on market direction. With uncertainties stemming from global economic policies and continued bursts of volatility, Ethereum’s future movements are closely watched by investors and analysts alike, who are pondering whether those who remain patient will be rewarded once stability returns to the crypto marketplace.