In the wake of the Christmas holiday, the cryptocurrency market witnessed a significant downturn, with Ethereum taking a notable hit. The Ethereum token, ETH, retreated on Boxing Day, erasing gains made during the Santa Claus rally.
ETH dropped to $3,340, marking a decline of over 5.6% from its peak this week. This slump coincided with a widespread red across the crypto industry, as the total market capitalization of all coins dipped to $3.29 million.
The crash occurred in a low – volume environment. CoinGecko data reveals that the 24 – hour volume plummeted to $17.5 billion, down from $24 billion the previous day, hitting its lowest level in over a month. Additionally, Ethereum’s futures open interest continued to decline, reaching a low of $26 billion, down from a monthly high of $28 billion. This drop in open interest signals waning demand among futures traders.
However, not all is bleak in the Ethereum market. DeFi Llama data shows that the total value locked (TVL) in its DeFi ecosystem has increased by 5.50% in the last 30 days, while Solana and Tron’s TVL have dropped by over 3% during the same period.
The active addresses ratio in Ethereum has been on an upward trend in recent months. Rising from an October low of 0.37% to 0.57%, it has reached its highest level since August. The total number of active Ethereum addresses has now exceeded 927,000. Moreover, Ethereum’s Market Value to Realized Value (MVRV) score rose by 2.35% in the last 24 hours to 1.64. An MVRV figure below 3.8 suggests that the asset is relatively undervalued.
On the technical front, the daily chart shows that the ETH price formed a small double – top pattern at $4,095, followed by a strong bearish breakout. It then rebounded and retested the pattern’s neckline at $3,500, which was its lowest swing on December 3. On Christmas day, ETH formed a small doji candlestick pattern, typically a bearish sign. Additionally, a bearish flag chart pattern has emerged.
Analysts predict that Ethereum is likely to experience a bearish breakout and reach the psychological level of $3,000, a 10% drop from the current price. This market movement comes amidst broader scrutiny of the crypto industry, as exemplified by the UK FCA’s warning on the Retardio Meme Coin. The events serve as a reminder of the volatile and complex nature of the cryptocurrency market.
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