Ethereum Plummets 50% Since December, Tests Key Support at $1,850

Ethereum, the second-largest cryptocurrency by market capitalization, has been experiencing a significant downtrend, with its price recently falling to $1,888. This prolonged bearish momentum has left traders speculating whether Ethereum will rebound or continue its downward trajectory.

The latest price movements indicate that Ethereum is struggling to maintain key support levels. Technical indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) suggest potential oversold conditions, which could signal a short-term bounce. However, these indicators alone do not confirm a reversal. The RSI, currently at 25.12, is deep in oversold territory, typically signaling that an asset is undervalued and could attract buyers. For a bullish reversal, Ethereum needs to push above the 30-35 RSI range, indicating returning bullish momentum. If the RSI remains suppressed, Ethereum could continue its downward slide before finding a firm bottom.

The MACD indicator paints a highly bearish picture, with the MACD histogram at -193.6, indicating strong negative momentum. The MACD line is far below the signal line at -18.8, reinforcing the bearish outlook. A trend reversal would require the MACD line to start curving upward and crossing above the signal line. Without this, Ethereum is likely to continue facing selling pressure, potentially testing lower support zones before a meaningful recovery.

Ethereum is currently testing a crucial support level around $1,850-$1,880. This zone has previously acted as strong support, and if Ethereum holds above it, we could see a short-term rebound toward $2,000-$2,100. If this support fails, Ethereum 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, Ethereum faces resistance at $2,000, a psychological level that must be reclaimed for a bullish shift. If Ethereum breaks above this resistance and sustains momentum, it could pave the way for a recovery toward $2,250-$2,400.

Ethereum's price has been on a downward trajectory since December 2024, plummeting from over $4,000 to its current level, marking a significant decline of over 50%. This steep drop has raised concerns among investors and analysts alike, with many speculating whether the cryptocurrency will continue to fall or if a rebound is on the horizon. The bearish trend is evident in Ethereum's daily chart, which shows a strong bearish market structure. The price has broken through the 23.6% Fibonacci extension at $1,944 and has since retested this level as resistance, indicating that sellers are still in control. The On-Balance Volume (OBV) indicator continues to decline, suggesting elevated selling pressure, while the RSI remains below the neutral 50 mark, reinforcing the downtrend. Although there has been a bullish divergence on the RSI in the past two weeks, indicating a possible short-term bounce, the overall trend remains bearish.

Despite the continued downtrend, there is potential for a short-term rebound. The $2,100 region is a potential target if Ethereum experiences a price rebound. However, this would likely be a temporary move before encountering resistance, as the broader market conditions continue to favor sellers. The declining OBV and the inability of Ethereum to hold above key resistance levels indicate that a consolidation phase has not yet started. For a real shift in momentum to occur, Ethereum would need to form a range and see an increase in buying volume, signaling accumulation. Until then, bears are expected to maintain control.

Looking ahead, Ethereum’s next significant support is at $1,544, which aligns with the potential bearish targets in the coming weeks. This level is crucial, as a further decline below this point could lead to even lower price targets. Additionally, the 6-month liquidation heatmap reveals a dense cluster of liquidation levels in the $1,600 to $1,800 region, which could act as a strong support zone and potentially set the stage for a reversal. To the north, the $2,360 and $2,872 levels are marked as strong resistance zones, but given the current market dynamics, these prices seem out of reach in the short term unless Ethereum can reverse its bearish trend.

The 1-week liquidation heatmap offers more insight into the short-term trend. It suggests that Ethereum could form a range between $1,840 and $1,960. This range could be pivotal for traders looking to enter short positions. If the price bounces toward $2,000 but fails to break through, it may signal a prime opportunity to go short as the downtrend is likely to resume. While Ethereum may experience a minor bounce in the near future, the overall market conditions remain bearish. Traders should keep a close eye on the $2,000 resistance level and the $1,544 support. If Ethereum fails to break through $2,000 and shows signs of stalling, it could be a good opportunity to enter a short position. With the bearish structure intact and the potential for further declines, Ethereum’s price could continue to head south in the coming weeks.