- 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.
