Ethereum Drops 2.14% After 43.75% Rally, Tests $2,500 Resistance

Ethereum, the world's second-largest cryptocurrency, experienced a notable decline, falling below the $2,600 mark. This drop followed a significant rally that saw Ethereum's price surge nearly 40% from a low of $1,808 on May 8 to $2,600 on May 10. The rally was driven by renewed interest in digital assets and a major network update known as Pectra, which increased staking limits and wallet usability. The Pectra update, which went live on May 7, acted as a catalyst for fresh interest in Ethereum, following last year's Dencun upgrade.

The rally began to lose momentum after surpassing $2,500 on May 10, with Ethereum falling to a low of $2,407 on Monday. Market observers noted that the sharp move from $1,800 to above $2,500 was facilitated by the low supply concentration in that range. However, the rally encountered significant resistance near $2,580, where a massive sell wall held nearly 1.3 million ETH. As Ethereum approached this level, the supply began to decline, dropping to just one million ETH, indicating that many holders chose to exit their positions near their cost basis, cashing in on the recent rally.

The correction comes after Ethereum gained over 35% and tested the $2,600 resistance zone. Ethereum's price surged 43.75% between May 8 and 10, from $1,808 to $2,600. At the time of reporting, Ethereum was down 2.14% in the last 24 hours to $2,497, reflecting profit-taking across the broader crypto market. Bulls are attempting to push the ETH price beyond $2,500, but bears have maintained selling pressure. If the price falls below $2,435, Ethereum might drop to $2,320. If the price rebounds from $2,320, the bulls will try to restart the upward trend. Attention remains on the $2,580 resistance, with one million ETH left there. The next resistance is at $2,850, but if that is overcome, ETH might reach $3,000. Conversely, if the price falls and breaks below $2,320, it indicates that the bulls are taking profits. ETH may drop to $2,110, which is expected to serve as support.

The sudden drop after a sharp rally underscores the volatility and unpredictability of the cryptocurrency market. Ethereum's price action has been influenced by various factors, including market sentiment, network updates, and supply dynamics. The recent price movements highlight the importance of monitoring key resistance and support levels, as well as understanding the underlying market conditions that drive price fluctuations. As Ethereum continues to navigate through these challenges, investors and traders will be closely watching for any signs of a potential rebound or further decline.