Ethereum Price News: Drop Below $2K Could Spark Retest of Cycle Low

Ethereum (ETH) has gone down by 12.6% in the past 30 days and is, by far, the worst-performing token in the top 5 during this period.

The reason why the market has shunned Ethereum exactly is hard to pinpoint. The fact is that the decline could worsen as the token has dropped below the $2,000 psychological threshold during today’s session.

This could trigger a cascade of liquidations that could pull ETH down to its cycle lows of $1,800.

Trading volumes have jumped by 24% in the past 24 hours alone, indicating rising selling pressure. At $18 billion, these volumes account for nearly 8% of the token’s circulating market cap.

Liquidations Spike to Second Highest Level in the Past 3 Months

Long liquidations across the crypto space climbed to $861 million during this period, with ETH accounting for around a quarter of that total.

Meanwhile, yesterday was the second worst day for bulls in terms of liquidations in the past 90 days, as $138 million worth of long positions were taken out of circulation.

Rising liquidations increase the risk of a sharper drop as a result of what seems to be an ongoing long squeeze. At a point when geopolitical turmoil is at a peak and sentiment remains shaky, the odds of revisiting this cycle’s low at $1,750 are quite high.

According to the Fear and Greed Index, sentiment has soured to levels not seen since early February. This gauge currently sits at 32, indicating that investors are once again in “Fear Mode.”

Earlier today, economic data from the U.S. showed that inflation is rising. The PCE Price Index rose to 3.3%, as the market expected. However, this leaves out of the table the possibility of a rate cut this year, despite the appointment of a new, and potentially more dovish, head of the Fed.

ETH is Following a Pattern We Have Seen Before — Twice

Even though we believe that this bearish cycle is already over, a drop to $1,750 is on our cards. We have been tracking a weekly buy signal for a while that has yielded impressive results in the past.

Have a look at how similar Ethereum’s price action is compared to what we saw back in 2019 and 2022. At that time, the crypto market was starting to recover, and the Relative Strength Index (RSI) was a “canary in the coal mine” for these moves.

In all three instances shown in the chart, once the RSI dipped to 30 or below, that marked the end of that bearish cycle. However, the price went down at some point to retest the cycle’s low before resuming its rally.

This signal has a 100% win rate, and we have no reason to believe that things will play out differently this time. In fact, the passing of the Clarity Act is actually one of the strongest tailwinds that the industry may experience in this decade, as crypto adoption in the U.S. should accelerate.

With this in mind, even though today’s pullback could push ETH back to $1,750, we have strong reasons to believe that this can be a good opportunity for late buyers to chip in at price levels that ETH may not revisit for years.