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On Tuesday, a short-term surge in prices increased investor excitement about the potential for cryptocurrencies to continue their upward trend. However, a 2.6% drop in Ethereum (ETH) prices in the last 24 hours could diminish hopes for a swift return to all-time highs.
Ethereum at a Pivotal Level
Ethereum‘s price, after reaching $4,091, is now hovering around $3,430. A 38% decrease in the 24-hour trading volume to $19 billion could suggest a drop in investor interest. Another 3% correction in market value reflects a growing bearish trend. The drop in prices over the weekend and earlier this week has led to losses for many investors. As Ethereum tests the $3,050 support level from its recent peak, liquidations occur in the millions.
According to Coinglass data, the derivatives market also experienced a slight loss, falling from a new record high of $13 billion in March to $11.34 billion. Although there has been a notable recovery to $11.7 billion, further corrections in the current position cannot be ignored. The decrease in open positions in derivative markets indicates a decline in trader activity. This could reflect reduced liquidity, waning market confidence, and the potential for changes in market trends.
ETH’s TVL
According to DefiLlama, the Total Value Locked (TVL) metric in the ecosystem’s smart contracts, which tracks assets in decentralized finance (DeFi), has dropped from its recent high of $57.59 billion to $50.63 billion. As DeFi TVL shrinks, it tends to increase selling pressure. This could mean investors are withdrawing their tokens from staking contracts to sell, leading to further price declines.
Moreover, the token’s future sentiment could be used as an indicator. The recovery seen last week reached $3,640, but a correction was made quickly due to a lack of momentum. Investors might need more convincing that Ethereum will rise above $4,000 and then to $5,000. Meanwhile, the 38.2% Fibonacci level is acting as support, and a bounce from this level for ETH is expected. The Moving Average Convergence Divergence (MACD) indicator is showing signs of retreating towards the neutral zone despite the rise, which could eventually encourage investors to short ETH.
