Ethereum (ETH), the second-largest cryptocurrency by market cap, is showing signs of a potential price decline in the near future. The sentiment in the cryptocurrency market has turned bearish over the past few days, leading to a significant drop in ETH’s price.
Technical analysis suggests that ETH has broken out of a bearish Head-and-Shoulders pattern and has breached a crucial support level at $3,250. This bearish price action has prompted traders to take short positions, which could further drive down the price of ETH in the coming days. The failure to hold the $3,250 support level has raised concerns among investors, with a potential 11% drop looming if ETH closes below $3,200, taking it to the $2,850 support level.
On-chain metrics also indicate a bearish outlook for ETH, as the long/short ratio currently stands at 0.884, signaling strong bearish sentiment among traders. Additionally, data shows that 53.07% of top traders hold short positions, while 46.93% hold long positions.
Major liquidation levels are at $3,185.5 on the lower side and $3,361.9 on the upper side, with traders heavily over-leveraged at these levels. If the price drops to $3,185.5, nearly $261.01 million worth of long positions will be liquidated, while a rise to $3,361.9 could lead to approximately $708.16 million worth of short positions being liquidated.
Currently, ETH is trading near $3,225, with a price decline of over 1.65% in the past 24 hours. However, trading volume has dropped by 29%, indicating reduced participation from traders and investors.
Overall, the bearish sentiment surrounding ETH, coupled with technical indicators and on-chain metrics, suggests that a price decline is likely in the coming days. Traders and investors should closely monitor the support levels and market dynamics to make informed decisions about their positions in ETH.