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BlockNews
Home BREAKING NEWS

Ether Falls 6% and Faces Major Liquidations: Here is Why

Matoy by Matoy
October 2, 2024
in BREAKING NEWS, CRYPTO
Reading Time: 2 mins read
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  • Ether’s price dropped 6% over 24 hours, causing $100 million in liquidations, mainly from long positions.
  • Analyst Jesse Colombo views crypto as a risk asset, unlike traditional safe-havens like gold.
  • Ether continues to exhibit a strong correlation with Bitcoin and U.S. equities, impacting its price movement.

The price of Ether fell sharply over the past 24 hours, experiencing a 6% decline amid growing tensions in the Middle East. The correction impacted the broader cryptocurrency market, which followed similar declines seen in other risk-sensitive assets, such as U.S. equities. Market analyst Jesse Colombo noted that during times of geopolitical instability, cryptocurrencies tend to fall, which contrasts with traditional safe-haven assets like gold. According to Colombo, this reaffirms his belief that cryptocurrencies remain high-risk investments similar to tech stocks.

The situation in the Middle East also pushed up oil prices by 5%, while gold gained 1.3%, suggesting a temporary shift in investor sentiment towards assets perceived as safer.

Major Liquidation Event for Ether

Ether’s price drop triggered its largest liquidation event since August 5, when Ethereum saw a major market correction. Data from CoinGlass revealed that over $100 million in Ether positions were liquidated during this recent decline, with most of these—$98 million—being long positions. High liquidation events often lead to additional downward pressure on price, especially if buying interest fails to absorb the sell-off.

While several cryptocurrencies rebounded quickly after this market-wide dip, Ether remains below $2,500. A significant factor behind this lag is its close correlation with Bitcoin. The 90-day rolling correlation index between Ether and Bitcoin stands at 0.82, indicating a strong link between the two assets.

Correlation with U.S. Equities

Ether’s movements are also closely related to U.S. equities, including the S&P 500 and Dow Jones Industrial Average. Both indexes saw minor corrections following the escalation of tensions in the Middle East. Data suggests a correlation coefficient of 0.87 between Ether and the S&P 500 and 0.83 between Ether and the Dow Jones, indicating that equity market trends have a considerable influence on Ether’s price behavior.

Despite the current setbacks, Ether’s price may be of interest to long-term traders. From a technical analysis perspective, Ether recently entered the “golden zone” after a bullish break of structure (BOS) in mid-September. The golden zone, defined by the 0.5 and 0.618 Fibonacci retracement levels, is often considered an opportunity for high-time-frame swing traders to enter a position. If Ether resumes its upward trend in the coming weeks, the current price levels could be seen as an opportunity to establish long positions.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: Ether
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Matoy

Matoy

If Matoy is not busy looking at the latest Web3 news, he's always in the kitchen cooking delicious meals for his family. He's also a competitive fighting game player and a car enthusiast

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