Ether (ETH) price extended its downtrend on Dec. 20, dropping approximately 20% over the last four days. ETH is trading at $3,119, down roughly 15% over the last 24 hours.
Ether’s bearish performance on Dec. 20 mirrored similar downside moves elsewhere in the crypto market, with the total capitalization falling by approximately 9% to $3.21 trillion.
ETH/USD daily chart. Source: TradingView
Let’s look at the factors driving Ether’s price down today.
Ethereum futures traders turning bearish
Futures traders have turned bearish, with the aggregated premium of futures positions becoming negative for the first time since Nov. 6.
Ether’s drop triggered its largest liquidation since Dec. 9, as over $299 million in positions were liquidated during the latest drop, $270 million of them longs.
Ethereum liquidation chart. Source: CoinGlass
Such a high liquidation event can forcefully close long positions, resulting in a rapid, cascading price drop.
Ethereum ETF flows turn negative again
Investors’ de-risking behavior was also visible across the spot Ethereum exchange-traded funds (ETFs), with significant outflows.
After recording positive net flows for 18 consecutive days, data from SoSoValue shows US-based spot Ether ETFs recorded outflows totaling $60.47 million on Dec. 19.
Ether ETF flow chart. Source: SoSoValue
Grayscale’s ETHE fund, which witnessed its first-ever net inflows on Dec. 12, was the primary driver behind Dec. 19 Ethereum ETF withdrawals with a total of $58.13 million outflows.
Related: Bitcoin ETFs hit by record $671.9M outflows in 1 day
Profit-taking adds to Ether price headwinds
Ethereum’s downturn could also be attributed to profit-taking by early holders and short-term speculators following Ether’s run above $4,100.
The Dormant Coins Circulation metric by Santiment reveals that short-term holders (STH) are partially responsible for the sell-pressure, as shown by the slight uptick in the circulation of Dormant Coins aged 90, 180, and 365 days.
ETH Dormant Coin Circulation (STH). Source: Santiment
Most of these STHs are selling at a loss, with realized losses crossing $60 million over the past 48 hours.
One notable entity is the Ethereum Foundation, which sold approximately 100 ETH on Dec. 17, according to data from Lookonchain.
Since then, the Ether’s price has dropped approximately 17%, “marking another successful top sale,” Lookonchain said in a Dec. 20 post on X, adding:
“Over the past year, EthereumFoundation has sold 4,466 $ETH($12.6M) across 32 trades, with 15 of them executed at the top(marked in red in the table).”
Source: Lookonchain
ETH price confirms double top
Ether’s sell-off saw it lose the support provided by the $3,500 psychological level on Dec. 19, data from Cointelegraph Markets Pro and TradingView shows.
This decline validates a double-top pattern, which ETH price formed on the four-hour chart.
With the loss of the pattern’s neckline support at $3,500, ETH could extend the correction to $3,000. This target is obtained by measuring the height of the decline from the price top to its neckline.
Related: Crypto liquidations hit $1B as traders were ‘unprepared for bad news’
The appearance of a bearish cross on the four-hour timeframe that occurred when the 50-day simple moving average (SMA) crossed below the 100-day SMA indicates rising bearish momentum.
ETH/USD four-hour chart. Source: Cointelegraph/TradingView
On the other hand, the relative strength has crossed into the oversold region, indicating prices could soon see a relief bounce in the shorter term.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
