Why Did Ethereum Crash, and How Low Can the Eth Price Drop?

The cryptocurrency market has been on a wild ride for the past few days, with Ethereum (ETH) and Bitcoin (BTC) leading a dramatic downturn. Since Friday, the market has shed over $500 billion in value, leaving investors wondering what’s next. As of Monday, February 3, the market’s total valuation is hovering around $3.16 trillion, but the losses don’t stop there—over $2.1 billion was liquidated in just the past 24 hours.

Bitcoin has dropped by more than 10% in the past two weeks, now testing a crucial support level just above $91k. Ethereum has experienced a steeper drop, losing more than 30% over the same period and retesting a critical support level around $2,136.

Could this be the start of something bigger? Let’s dive in.

Did Trump Crash the Crypto Market?

The recent downturn in the crypto market is closely tied to Donald Trump Donald Trump Donald Trump is an American former president politician, businessman, and media personality, who served as the 45th president of the U.S. between 2017 to 2021. Trump earned a Bachelor of science in economics from the University of Pennsylvania in 1968. Trump won the 2016 presidential election as the Republican Party nominee against Democratic Party nominee Hillary Clinton while losing the popular vote. As president, Trump ordered a travel ban on citizens from several Muslim-majority countries, diverted military funding toward building a wall on the U.S.–Mexico border, and implemented a family separation policy. Trump has remained a prominent figure in the Republican Party and is considered a likely candidate for the 2024 presidential election President ‘s second term in office. After months of hype leading up to Trump’s inauguration in mid-January, the crypto market has seen a “sell-the-event” scenario. Trump’s trade wars with Canada, Mexico, and China have caused economic strain, leading to retaliation from these nations.

This, in turn, has caused the crypto market to follow the downward trend of major stock indexes, including Dow Futures.

Ethereum Struggles as Whales Panic Sell

A significant reason for Ethereum’s recent price drop is the panic selling by whales. On-chain data reveals that Ethereum’s supply on centralized exchanges has risen to a new 12-month high of nearly 16.2 million, with large holders selling off their Ether in the past 24 hours.

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Ether’s Support: Will it Hold?

From a technical analysis perspective, Ethereum is now testing an important support zone that needs to hold in the coming weeks to avoid further losses. Crypto analyst Ali Martinez believes that if Ethereum can stay above $2,750, it could trigger a rally beyond $6k as part of the next phase of the macro bull run.

Crypto analyst Benjamin Cowen suggests that Ethereum’s price, compared to Bitcoin and possibly the US dollar, is likely to bottom out once the Federal Reserve ends its Quantitative Tightening (QT) policy. This could mark a turning point for the asset.

As the crypto market faces its most significant challenges in months, investors are left to wonder if these assets will recover or continue their downward slide.

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