Ethereum Plummets 15% as Bearish Sentiment Intensifies

Ethereum's price has recently surged, but analysts remain cautious about its future trajectory. The cryptocurrency has broken below a critical support level of $2,200, intensifying bearish sentiment and raising concerns about a potential drop to $1,250. Analyst Ali Martinez warns that Ethereum's breakdown from a parallel channel could lead to a decline to $1,250 if the downward momentum persists. Following Ethereum's fall to $1,840, analysts have identified crucial support zones at $1,640 and $1,250. If selling pressure continues, ETH could plummet further toward the $1,250 target, which aligns with historical support and Fibonacci retracement levels.

On-chain data from Glassnode suggests potential accumulation near $1,886, offering temporary support. The Cost Basis Distribution (CBD) has increased from 1.6 million to 1.9 million ETH at this level, indicating that investors may be accumulating Ethereum. However, a custom Capitulation Metric, which integrates CBD and Realized Loss data, highlights growing capitulation pressure in the market. These indicators suggest that ETH could find temporary support around $1,886 before deciding its next move.

Long-term holders of Ethereum are also facing significant pressure. The Ethereum Long-Term Holder Net Unrealized Profit/Loss (NUPL) metric is now in the fear zone, reflecting long-term investors dumping their holdings as ETH declines below $2,000. Historically, such fear-driven sell-offs have created prime accumulation opportunities. When investor sentiment shifts, Ethereum could experience a strong rebound, mirroring past recovery patterns. The key question is whether enough buyers will step in to halt the decline.

Technical indicators also confirm the bearish trend. The Relative Strength Index (RSI) is at 35.68, indicating that ETH is approaching oversold conditions. This suggests potential buying interest at lower levels, but without a reclaim of lost support zones, short-term upside remains limited. The MACD (Moving Average Convergence Divergence) remains in negative territory, with the MACD line at -209.5, below the signal line at -195.4, confirming the ongoing bearish momentum. A positive shift in these indicators would be necessary for any reversal. Until then, traders should watch for reactions at those key support levels – $1,640 and $1,250.

Analyst Benjamin Cowen has drawn parallels between Ethereum's current trend and market conditions from 2019. He suggests that the ETH/BTC pair may not bottom until there is a shift in the Federal Reserve's monetary policy. Cowen's analysis indicates that Ethereum has been under heavy pressure since early December last year, almost touching the 12-month falling support this week. The bearish trend in Ethereum mirrors the market conditions seen in 2019, with analysts warning that the bottom for Ethereum could extend for several months. This outlook is tied to potential shifts in U.S. economic policy, which could have a significant impact on the cryptocurrency market.

Ethereum is currently testing a crucial support level around $1,850-$1,880. This zone has previously acted as strong support, and if ETH holds above it, we could see a short-term rebound toward $2,000-$2,100. If the support fails, ETH could drop further, with the next major support at $1,700-$1,750. A breakdown below this level would put Ethereum in dangerous territory, potentially leading to a sharper sell-off toward $1,500. On the upside, ETH faces resistance at $2,000, a psychological level that must be reclaimed for a bullish shift. If ETH breaks above this resistance and sustains momentum, it could pave the way for a recovery toward $2,250-$2,400.

The technical indicators suggest that Ethereum is at a critical inflection point. The deep oversold RSI hints at a potential short-term bounce, but the strong negative MACD momentum suggests continued bearish pressure. For Ethereum to stage a recovery, it must hold above the $1,850 support and push past $2,000 to confirm bullish momentum. If it fails to do so, the bearish trend could extend toward $1,700-$1,750, leading to further downside risk. Ethereum is currently facing intense selling pressure, but oversold conditions might provide an opportunity for a relief bounce. Traders should watch for RSI recovery above 30 and MACD signals of trend reversal before confirming a bullish stance. Until then, Ethereum remains vulnerable to further declines, with $1,850 as the key support zone to watch.