After showing resilience over the past few weeks, the Ethereum price finally gave way, falling below $2,000 for the first time since March 10. The “King of Altcoins” succumbed to the downward pressure that spread across global financial markets on Friday, March 27, as geopolitical tensions in the Middle East rage.
With oil prices rising due to the supply shock caused by the partial closure of the Strait of Hormuz, inflation expectations in various global economies are rising rapidly. Specifically, fear of inflation appears to have sparked ongoing discussions about a possible interest rate hike by the US Federal Reserve, leading to a decline in cryptocurrency prices.
$111 million wiped from the market in ETH long liquidations
Ethereum price fell to its lowest level in two weeks on Friday, just below the critical $2,000 level, as the entire cryptocurrency market continues to battle the latest round of bearish pressure. As the price of ETH fell to this low, Bitcoin, the world’s largest cryptocurrency by market capitalization, also fell to around $65,500 that day.
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According to recent market data, this drop in Ethereum price below $2,000 was accompanied by large long liquidations of over $110 million. With the altcoin losing such a critical support level, it is not entirely outrageous to expect further declines over the coming days, especially given the gloomy market sentiment.
However, investors may want to watch the Ethereum price close at the end of the week before coming to any conclusion. If there is a convincing close below the $2,000 psychological support, then the cryptocurrency is likely to continue falling, potentially as low as the $1,750-$1,850 support region.
At the time of writing, the ETH price stands at around $1,980, reflecting a decline of almost 3% over the past 24 hours. According to data from CoinGecko, the price of Ethereum has fallen by more than 7% over the past seven days.
Spot Ethereum ETFs Suffer $158M in Net Outflows
Just looking at the apparent demand trend for Ethereum over the past few days, the latest price drop seemed inevitable. According to recent market data, U.S.-based Ethereum spot exchange-traded funds (ETFs) saw total net outflows of approximately $158 million over the past week.
Ethereum ETFs experienced a seven-day streak of negative outflows, recording over $400 million in flows during this period. This series of negative performances is a hallmark of a decline in market demand, resulting in downward pressure on prices.
Therefore, sustained capital inflows into products such as spot 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
