On the 5th of February, Ethereum [ETH] witnessed $466.4 million in liquidations, with $382 million of them being long. On the day, ETH prices fell 14.96%, from $2,148 to $1,826.
Crypto market sentiment was in extreme fear. The Fear and Greed index reached 11, a low not seen since 2023. AMBCrypto reported that sub-20 readings on the index represent heightened stress, forced selling, and broad de-risking.
The ETH/BTC was at a 3-year low, representing the severe underperformance of the leading altcoin against the leading crypto. The $2k level was at high risk, noted aMBCrypto, and Ethereum has slid below this key psychological level since then.
Plotting the ETH path so far
On the 1-day chart, the strength of the bears was very evident. In May and June last year, ETH consolidated around $2,500 for a few weeks before catapulting higher in July. In November, the same area was tested as support and saw a bounce.
The subsequent retest over the past week saw no noticeable reaction from ETH bulls. The price bulldozed its way below the $2.5k demand zone and also beyond the weekly swing point at $2.1k.
The RSI was in oversold territory. The 18.68 daily RSI value on the 5th of January was the lowest since August 2024. The OBV also made a new low, reflecting heavy sell volume.
Can THESE zones drag ETH prices higher?
The liquidity to the south has been nearly wiped out, showed the 1-month lookback period liquidation heatmap. Zooming out even further, the 1-year heatmap agreed. A massive pocket of liquidations around the $2k price level was taken out during the recent dip.
The magnetic zones further south were at $1,500 and lower. Meanwhile, the $2,400 and the $2,700-$2,900 areas had some liquidations that the price could target, showed the 1-month heatmap.
Why Traders should sell the bounce
The lack of response at the $2.4k demand zone highlighted bearish dominance. A further drop toward $1.5k remains possible, so swing traders looking to catch any ETH bounce should be wary.
The $2.1k and $2.4k levels were likely to be revisited in the coming weeks. Traders can be prepared for a bearish reaction at these levels.
Final Thoughts
- Ethereum raced past key demand zones over the past week’s relentless selling pressure.
- It is possible that ETH would bounce to $2.4k in the coming weeks before its next bearish impulse move.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
