After showing resilience over the past few weeks, Ethereum’s price has finally given way, falling below the $2,000 level for the first time since March 10. The “Altcoin King” succumbed to the downward pressure that spread across global financial markets on Friday, March 27, as geopolitical tensions in the Middle East rose.
As oil prices rise due to the supply shock caused by the partial closure of the Strait of Hormuz, inflation expectations are rising rapidly in various global economies. In particular, the fear of inflation appears to have sparked ongoing discussion about the US Federal Reserve potentially raising interest rates, which would lead to a decline in cryptocurrency prices.
$111 million flushed from the market as a result of long ETH liquidations
On Friday, Ethereum’s price fell to a two-week low just below the critical $2,000 level, as the overall cryptocurrency market continues to grapple with the latest wave of bearish pressure. With the price of ETH falling to such a low level, Bitcoin, the world’s largest cryptocurrency by market capitalization, also fell to around $65,500 that day.
According to the latest market data, the decline in Ethereum’s price below $2,000 was accompanied by significant long liquidations amounting to over $110 million. With the altcoin losing such a critical level of support, it is not entirely outrageous to expect further declines over the next few days, especially given the sluggish market climate.
However, investors may want to pay attention to Ethereum’s price close at the end of the week before jumping to any conclusions. If there is a compelling close below the $2,000 psychological support, then the cryptocurrency is at risk of falling further, potentially even to the $1,750-$1,850 support area.
At the time of writing, ETH is trading at around $1,980, reflecting an almost 3% decline in the last 24 hours. According to CoinGecko data, the price of Ethereum has fallen by over 7% in the last seven days.
Ethereum spot ETFs saw net outflows of $158 million
Looking at the apparent demand trend for Ethereum over the past few days, the recent price drop seemed inevitable. According to the latest market data, US Ethereum spot funds (ETFs) recorded total net outflows of approximately $158 million last week.
Ethereum ETFs have been on a seven-day streak of negative outflows, recording over $400 million in flows during that period. This series of negative results is a characteristic sign of weakening market demand, resulting in downward pressure on prices.
As such, sustained capital inflows into products such as spot traded funds could signal a return of demand to the market and possibly an upward rally in the price of Ethereum.
Featured image from iStock, chart from TradingView
