Ethereum (ETH) price took a sudden plunge as more investors liquidated their positions. The coin bounced back to its lowest level since Monday this week at $1,976. It has declined more than 8% from this week’s high.
ETH rapidly increases liquidation
Ethereum joined other cryptocurrencies in a major selloff on Monday. Bitcoin dropped below $30,000 for the second time this week. In the same period, popular coins such as Arbitrum, SpaceID, Kaspa and Veracity also pulled back.
It is unclear why Ethereum and other cryptocurrencies crashed on Wednesday. One possible reason is that the number of bullish liquidations has reached its highest level in months. According to CoinGlass, the amount of bullish liquidations exceeded $41.1 million. In contrast, short liquidations exceeded $1.2 million.
These numbers were significantly higher than on Wednesday when bulls liquidated only $9.6 million. Shorts liquidations were $16 million.
In most periods, the cryptocurrency jumps when short-sellers start liquidating their coins and vice versa. For example, the price of Ethereum soared on April 14 when shorts liquidation exceeded $62.8 million.
Ethereum’s decline also coincided with outflows from several centralized exchanges. Binance Has Over $18 Million Flow in the last 24 hours. Similarly, Bitfinex, Huobi and Bybit lost more than $20 million each.
Meanwhile, Ethereum price also reacted to Gary Gensler’s latest query on Tuesday. In testimony to Congress, he has repeatedly declined to answer whether he believes Ethereum is now a financial security.
In a previous interview, Gensler said that he believes that Ethereum and other proof-of-stake coins are securities. His main concern is the opacity of betting, which he believes should be regulated to protect customers. On Monday, the SEC identified five coins, including Algorand, that it believes are securities.
Ethereum Price Prediction
The daily chart shows that there has been an uptrend in ETH price over the past few months. It reached a high of $2,120, the highest point in months. A closer look shows that it has formed a dark cloud cover pattern, which explains why it has fallen so rapidly. It also broke below the first resistance of the Woody Pivot point.
Ethereum remained well above the 50-day and 25-day moving averages. Hence, there is a possibility that the coin will witness a bullish breakout in the coming weeks and buyers will target the second resistance at $2,200.
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