The Ethereum price was one of the hardest hit during the flash crash that took place on Monday. The crash pushed the asset’s price below $2,200 for the first time in the past week, and the trend is still low around this point. With the market showing some recovery momentum, questions remain about what could have caused the crash.
Ethereum price fell as whales were sold
One of the most obvious causes of the flash crash that affected the Ethereum price is the fact that major holders have been selling. This month, ETH reached its highest level in the past year, causing many investors to return to profits. With the crypto market not seeing a completely bullish run, there are expectations that the market could crash and investors are trying to secure profits before this happens.
Crypto analyst Ali Martinez marked selling these large holders in a post on X (formerly Twitter) on Sunday. According to him, these large holders actually started selling when the price first crossed $2,300. This means that the selling pressure had been building for some time before it was reflected in the price.
The whales who have more than 10,000 ETH in their balance had reduced their holdings by the end of November. By December, their assets had fallen to their lowest point in the past three months, evidence of the massive sell-off of these whales.
ETH price at $2,242 | Source: ETHUSD on Tradingview.com
Uncertainty about macro factors
Macroeconomic uncertainty has also played a role in the crypto crash that sent the Ethereum price soaring to $2,200. An example of this is the release of the CPI data that is expected to take place on Tuesday. As investors eagerly await the results of the announcement, market swings are expected.
November inflation data is also expected to be released this week, as is the Fed’s decision and statement on Monday. Prior to these events, high volatility is always expected if investors want to secure some of their positions.
Nevertheless, Ethereum is starting to show bullish momentum again. Since then, it has risen from its low of $2,170 and is back above $2,000, where bulls are already providing a lot of support. If the price of Bitcoin continues to rise, Ethereum could regain the $2,300 level before the day is out.
The price of ETH at the time of writing is $2,238, down 4.50% in the last 24 hours.
Featured image from Quora, chart from Tradingview.com