Ethereum experienced a staggering $466.4 million in liquidations, with a significant $382 million attributed to long positions. On the day, ETH prices experienced a decline of 14.96%, dropping from $2,148 to $1,826. The sentiment in the crypto market was characterized by extreme fear. The Fear and Greed index has plummeted to 11, marking a low not witnessed since 2023. AMBCrypto highlighted that sub-20 readings on the index indicate increased stress, compelled selling, and widespread de-risking.
The ETH/BTC pair has hit a 3-year low, highlighting the significant underperformance of the top altcoin compared to the leading cryptocurrency. The $2k level was at high risk, noted aMBCrypto, and Ethereum has since slipped below this crucial psychological threshold. The 1-day chart clearly showcased the dominance of the bears. During May and June of the previous year, ETH experienced a consolidation phase around the $2,500 mark for several weeks before surging upward in July. In November, the same area was examined as support and experienced a bounce.
The recent retest over the past week has shown a lack of significant response from ETH bulls. The price crashed through the $2.5k demand zone and also fell below the weekly swing point at $2.1k. The RSI found itself in oversold territory. The daily RSI value of 18.68 recorded on January 5th marks the lowest point since August 2024. The OBV has reached a new low, indicating significant sell volume. The liquidity to the south has been almost entirely eradicated, as indicated by the 1-month lookback period liquidation heatmap. Taking a broader perspective, the 1-year heatmap confirmed the findings. A significant cluster of liquidations near the $2k price level was triggered during the latest downturn. The magnetic zones located further south were priced at $1,500 and below. In the meantime, the $2,400 and the $2,700-$2,900 zones experienced some liquidations that the price might aim for, as indicated by the 1-month heatmap.
The absence of reaction at the $2.4k demand zone underscored the prevailing bearish sentiment. A potential decline toward $1.5k is still on the table, prompting swing traders aiming to capitalize on any ETH rebound to proceed with caution. The $2.1k and $2.4k levels are expected to be revisited in the upcoming weeks. Traders should brace themselves for a potential bearish reaction at these levels. Ethereum surged beyond critical demand zones amid the ongoing wave of selling pressure over the past week. ETH may experience a bounce to $2.4k in the upcoming weeks before facing its next bearish impulse move.