Key takeaways
Has Ethereum already reached its lowest level?
Back-to-back lows, weak bids, and weak post-crash structure suggest that Ethereum’s $3.2k bottom remains fragile.
Does current liquidity favor a breakout?
ETH stablecoin supply has reached an all-time high, but FOMO has not taken off, keeping conviction low.
Has Ethereum (ETH) really hit rock bottom?
ETH kicked off November by hitting not one, but two key floors. First, a 7.78% drop saw ETH fail to turn $3.8k into support, and this was followed by an even bigger 8.80% drop, struggling to hold on to $3.5k.
In short, ETH posted two consecutive lows in a single week, which generally signals a bearish market structure.
Does this mean it’s a bit premature to call Ethereum’s current low around $3.2 million?
Back-to-back crashes keep Ethereum weak
After back-to-back crashes, Ethereum is struggling to find its footing.
As a reminder, on November 3 and 4, the market experienced another flash crash, triggering a cascade of liquidations of $2 billion. Of course, that was a small matter compared to the $20 billion wipeout in mid-October.
However, the affected feeling was clear. ETH fell 15% to $3.05,000, posting two consecutive lows. Sure, a local trading floor could swing some deals, but the post-crash structure still looks fragile.
Source: TradingView (ETH/USDT)
Flashback to the October crash, ETH was shorted for three weeks in a row.
During this period, Ethereum retested $3.8K four times as bulls attempted to reclaim the pre-crash open at $4.3K and build a bottom. However, selling pressure maintained the fragile structure, without any real follow-up.
Fast forward to now, a low around $3.2k will not trigger a breakout unless a follow through appears. That said, the supply of stablecoins on Ethereum just reached an all-time high. So could this post-crash cycle play out differently?
Cash Flows In, But ETH Fails to Show Conviction
Liquidity is piling up, but Ethereum bulls are not putting it to use.
On the DeFi side, TVL has lost around $20 billion over the past month, showing that funds are either disappearing or sitting on the sidelines. Even with record stablecoins, supply is thin and the market structure appears fragile.
On the derivatives side, ETH Open Interest did not experience an increase comparable to that of October, down by $5 billion compared to $15 billion at the time. This means liquidation pressure is lighter, so weak bids could still trigger short-term squeezes.
Source: Glassnode
By propping up the fragile structure, HODLers still make losses.
As the chart above shows, Ethereum’s net P/L remains deep in the red, signaling more realized losses than gains. In fact, on November 4, ETH’s realized P/L reached -$626 million, an eight-month low.
In short, Ethereum is not deviating much from its post-October crash pattern. FOMO has not been operating in key sectors despite the influx of liquidity, and with conviction fading, ETH’s 3.2k floor still appears too fragile.
