Ethereum’s (ETH) price took a nosedive, hitting its worst day in over a year. As Bitcoin (BTC) neared falling below $50k for the first time since early February, Ethereum’s value dropped more than 22 percent in just 24 hours, trading around $2,294 during Monday’s London session, according to the latest crypto reports.
This sharp decline led to the liquidation of over $344 million in the Ethereum leveraged market. Interestingly, Ethereum’s market cap has now fallen below the cash reserves of Warren Buffett’s company, which holds about $277 billion.
This dramatic collapse sent shockwaves through the crypto market, leaving investors reeling. What triggered this sudden and steep decline?
What Triggered the Ethereum Drop?
The dramatic drop in Ethereum’s price, which saw over $1 billion in liquidations, came after a significant downturn in global stock markets. Japan’s stock market had its worst performance since 1987, raising concerns about a potential global economic recession.
With US markets yet to open, fears of further crypto sell-offs have grown. Bitcoin’s fear and greed index has fallen below 26 percent, signaling extreme fear among investors. In response, Robinhood Markets has halted its 24-hour trading to prevent a liquidity crisis.
Impact of ETF Approvals
Since the approval of US-based spot Ether ETFs, issuers have faced a net cash outflow of about $510 million. Grayscale’s ETHE, which holds over $5.97 billion worth of Ether, indicates that further market declines could be on the horizon.
Additionally, Jump Trading has been selling off its Ether holdings, having offloaded $500 million worth in the past two weeks.
Is the Macro Bull Cycle Over?
Ongoing uncertainties in the Middle East are also adding to the market’s instability. Despite recent trends suggesting the macro crypto bull cycle may have peaked, some indicators point to a possible rebound soon.
The US Federal Reserve might soon cut interest rates, influenced by the upcoming general elections.
A Look at the Seasonal Trends
Historically, the crypto market has struggled in August and September but often sees impressive gains in October. While the current outlook may seem bearish, the coming months could bring a recovery, offering a potential upside for investors.
Also Check Out: Why is The Crypto Market Down Today? Key Reasons Behind the Bloodbath on Satoshi Street
The future of Ethereum and the broader crypto market remains uncertain. What’s your trading strategy?
