After showing resilience in recent weeks, the Ethereum price finally succumbed, falling below the $2,000 level for the first time since March 10. The ‘King of the Altcoins’ succumbed to the downward pressure spreading across global financial markets on Friday, March 27, as geopolitical tensions rage in the Middle East.
With oil prices rising due to the supply shock caused by the partial closure of the Strait of Hormuz, inflation expectations are rising rapidly in several global economies. Specifically, fears of inflation appear to have driven the ongoing chatter about a possible rate hike by the US Federal Reserve, which would lead to a drop in crypto prices.
$111 million flushed from the market due to long ETH liquidations
On Friday, Ethereum price fell to a two-week low just below the critical $2,000 level as the entire cryptocurrency market continues to struggle with the latest wave of bearish pressure. When the price of ETH fell to this low, Bitcoin, the world’s largest cryptocurrency by market cap, also fell to around $65,500 that day.
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According to recent market data, this Ethereum price drop below $2,000 was accompanied by significant long-term liquidations of over $110 million. With the altcoin losing such a critical support level, it is not entirely outrageous to expect a further decline in the coming days, especially given the sluggish market environment.
However, investors could look forward to Ethereum’s closing price at the end of the week before drawing a conclusion. If there is a convincing close below the psychological support of $2,000, then the cryptocurrency is at risk of further decline, possibly as low as the support region of $1,750-$1,850.
At the time of writing, ETH’s price is around $1980, reflecting a drop of almost 3% in the last 24 hours. According to data from CoinGecko, the Ethereum price has fallen by more than 7% over the past seven days.
Spot Ethereum ETFs Suffer $158 Million in Net Outflows
Just looking at Ethereum’s apparent demand trend over the past few days, the latest price drop seemed inevitable. According to recent market data, US-based Ethereum spot exchange-traded funds (ETFs) have recorded total net outflows of around $158 million over the past week.
The Ethereum ETFs experienced negative outflows for seven days, seeing flows of over $400 million during that period. This series of negative performances is a typical sign of declining market demand, resulting in downward pressure on prices.
Therefore, continued capital inflows into products such as exchange-traded funds could signal a return of market demand and perhaps bullish momentum for the Ethereum price.
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Featured image from iStock, chart from TradingView